Help with TaxAct: Can't get it to properly handle my Backdoor Roth conversion
I'm so frustrated with TaxAct's software right now! I'm trying to enter my 1099-R forms for two backdoor Roth accounts I have with Vanguard, and the software keeps wanting to tax these conversions when they shouldn't be taxed. Here's what happened: I made full deposits to two Traditional IRA accounts (with post-tax dollars), then converted both accounts completely to Roth IRAs (including like $3 of interest that accumulated). Pretty straightforward backdoor Roth process. When I try to enter this in TaxAct: * I enter the 1099-R info, and the software immediately treats the whole amount as taxable * On the next screen where it asks how much was converted, I enter the full amount, but it STILL treats everything as taxable * Then it asks how much was a rollover. Since a Backdoor Roth is technically a conversion not a rollover, I wasn't sure what to put. But if I enter the full amount here, it does remove it from taxable income and marks it as "ROLLOVER" on the forms I've searched everywhere in the software trying to find where to indicate these Traditional IRA contributions were made with post-tax dollars, but I can't find it. I even found a Roth IRA basis page through the search function, but nothing I enter there seems to fix the issue. Am I missing something obvious here? There has to be a way to correctly report a backdoor Roth in TaxAct without paying taxes twice!
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GalacticGladiator
This is a common issue with tax software when handling backdoor Roth conversions. The key is that you need to file Form 8606 to properly report your non-deductible Traditional IRA contributions. TaxAct should definitely have a way to handle this. When you enter your 1099-R, you're right that it initially treats the distribution as taxable. However, rather than using the "rollover" designation (which isn't technically correct), you need to find where to enter your non-deductible IRA contributions on Form 8606. In TaxAct, try looking under the "Federal" section, then "Income," and look for something like "IRA, Pensions, and Annuities." There should be an option specifically for Form 8606 or "Non-deductible IRAs." Once you enter your non-deductible contribution amount there, the software should recognize that you've already paid tax on that money and adjust accordingly.
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Aisha Hussain
•I looked again and you're right! I found the Form 8606 section under Federal > Income > IRA, Pensions and Annuities. There's a specific question about "Did you make nondeductible contributions to a traditional IRA?" that I somehow missed before. Once I selected "yes" there, it walked me through entering my basis (the amount I contributed with post-tax dollars). Is the interest that accumulated before conversion the only part that should be taxable?
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GalacticGladiator
•Yes, that's exactly right! The only taxable portion should be the interest that accumulated between your initial contribution and the conversion. Since you mentioned it was only about $3 of interest, that's the only part that should be subject to tax. When you complete Form 8606 correctly, line 18 should show just that small amount of earnings as taxable, while the rest of your conversion amount should be non-taxable. The form essentially tells the IRS that you've already paid tax on the contribution portion, so you don't need to pay again.
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Ethan Brown
After struggling with backdoor Roth reporting myself, I started using taxr.ai to help with complex tax situations like this. I had the exact same issue with TaxAct last year where it kept trying to tax my backdoor Roth conversion. I uploaded my 1099-R to https://taxr.ai and it immediately identified the problem - I hadn't properly documented my non-deductible contributions on Form 8606. The tool walked me through exactly what forms I needed and where in TaxAct to find them. Saved me from potentially paying thousands in unnecessary taxes!
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Yuki Yamamoto
•Does taxr.ai actually work with TaxAct specifically? I use TaxAct too and have the same backdoor Roth issues, but I'm worried about using a tool that might not be compatible with my tax software. Does it just give general advice or does it actually help you navigate where to click in TaxAct?
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Carmen Ruiz
•I'm skeptical about these tax tools. How is this different from just googling "how to report backdoor Roth in TaxAct"? I found several guides online for free. Does taxr.ai actually look at your specific tax situation or just give generic advice anyone could find online?
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Ethan Brown
•It works with any tax software including TaxAct! It doesn't integrate directly with TaxAct, but it gives you specific guidance on where to find the relevant sections in whichever software you're using. For TaxAct specifically, it told me exactly which menus to navigate through to find Form 8606. The big difference from Google is that it actually analyzes your specific documents and tax situation. When I uploaded my 1099-R, it didn't just give generic backdoor Roth advice - it identified that I had a basis tracking problem and gave me personalized steps based on my actual numbers. It's like having a tax pro look over your shoulder but a lot cheaper.
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Carmen Ruiz
Just wanted to update after trying taxr.ai for my backdoor Roth issue. I was really skeptical (as you could see from my earlier comment), but it actually saved me a ton of hassle. I uploaded my 1099-R and some other docs, and it immediately flagged that I needed to properly track my basis with Form 8606. The step-by-step guidance for TaxAct was super helpful - took me right to the screens I needed. Wish I'd known about this tool years ago when I first started doing backdoor Roth conversions! Would have saved me hours of frustration and possibly an audit.
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Andre Lefebvre
If you're still having trouble with the TaxAct software after trying to find Form 8606, you might want to try reaching out to the IRS directly. I know that sounds terrifying, but I used https://claimyr.com to get through to an actual human at the IRS without the ridiculous hold times. You can see how it works here: https://youtu.be/_kiP6q8DX5c. I had a similar backdoor Roth reporting issue last year, and the agent I spoke with walked me through exactly how it needed to be reported. Much better than fighting with the software for hours!
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Aisha Hussain
•Wait, you can actually talk to real IRS agents? I thought that was impossible these days! How long did you have to wait? And were they actually helpful with tax software specific questions like how to enter things in TaxAct?
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Zoe Dimitriou
•Sorry, but this sounds like a scam. The IRS doesn't help with commercial tax software issues - they'll just tell you to contact TaxAct support. And nobody at the IRS is going to walk you through how to enter a backdoor Roth. They don't give tax advice, they just answer procedural questions. I'm extremely dubious about any service claiming to get you "special access" to IRS agents.
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Andre Lefebvre
•I only waited about 15 minutes using Claimyr, compared to the 2+ hours I had spent on previous attempts calling the IRS directly. It was literally the difference between giving up and actually getting help. The IRS won't help you navigate TaxAct's specific interface, you're right about that. But they can clarify the proper way to report a backdoor Roth conversion on your tax forms, which is what I needed to know. The agent explained exactly what should go on Form 8606 and which lines were important, then I was able to find those sections in TaxAct myself. It's about understanding the forms, not the software.
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Zoe Dimitriou
I have to eat my words about Claimyr. After my skeptical comment, I decided to try it myself since I had a different tax question that had been bugging me for weeks. The service actually did get me through to an IRS rep in about 20 minutes when I had previously spent hours on hold and eventually given up. The agent clarified my question about foreign tax credits, which helped me figure out where I was going wrong in my tax software. For backdoor Roth issues specifically, they helped me understand how Form 8606 should be completed, which was the key piece I was missing. Not a miracle service, but definitely saved me hours of frustration.
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QuantumQuest
For what it's worth, I had a similar issue with TaxAct last year. The key is definitely Form 8606. But here's a tip: make sure you're entering things in the right order! I found that if I entered the 1099-R first, then tried to do the Form 8606 stuff, TaxAct got confused. But if I entered the non-deductible IRA contribution information FIRST, then entered the 1099-R for the conversion, it all worked perfectly. Might be worth trying if you're still having trouble.
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Jamal Anderson
•Does this order thing apply to other tax software too? I'm using TurboTax and having the exact same problem with my backdoor Roth. It keeps trying to tax the conversion even though I already paid tax on the contributions.
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QuantumQuest
•I'm not sure about TurboTax specifically as I've only used TaxAct, but I think the logic would be similar. The key is to establish your non-deductible basis first before you tell the software about the conversion. That way it knows you've already paid tax on those funds. I've heard TurboTax actually has a specific backdoor Roth walkthrough that's pretty good, so you might want to search for that in the software. Look for something about "IRA conversions" or "non-deductible contributions" in the search function.
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Mei Zhang
Make sure you're keeping track of your Form 8606 information year to year! This bit me hard last year. If you've been doing backdoor Roth conversions for multiple years, you need to have the previous year's Form 8606 values for line 14 (your basis). TaxAct won't automatically pull this information from your previous returns, even if you used TaxAct last year. Messed this up once and almost paid tax twice on $12,000!
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Aisha Hussain
•That's a great point - I've been doing backdoor Roth for 3 years now. Is there a way to check if I've been doing this correctly in previous years? I'm worried now that I might have paid tax twice without realizing it. Can I go back and amend returns if I find a mistake?
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Luca Ferrari
•Yes, you can definitely amend previous returns if you find mistakes! You'd file Form 1040X for each year that needs correction. To check if you did it right previously, look at your old Form 8606s - specifically line 14 should show your cumulative basis (total non-deductible contributions you've made over the years that haven't been converted yet). If you find you paid tax twice on backdoor Roth conversions, you can amend those returns to get refunds. You generally have 3 years from the original filing deadline to amend. I'd suggest pulling your old tax returns and looking at the Form 8606 line by line, or consider having a tax pro review them if the amounts are significant.
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Natasha Orlova
I went through this exact same nightmare with TaxAct last year! The software's handling of backdoor Roth conversions is definitely not intuitive. Here's what finally worked for me: 1. Don't enter your 1099-R first - that just confuses the software 2. Go to Federal > Income > IRA, Pensions and Annuities and find the Form 8606 section 3. Answer "yes" to making nondeductible contributions to a traditional IRA 4. Enter your basis (the amount you contributed with after-tax dollars) 5. THEN enter your 1099-R information The key insight is that TaxAct needs to know about your nondeductible contributions before it processes the conversion. Once you do this correctly, only the small amount of earnings (like that $3 of interest you mentioned) should be taxable. Also, keep really good records of your Form 8606 from year to year - you'll need the basis information for future conversions. I learned this the hard way when I almost paid tax twice on a $6,000 conversion because I didn't carry forward my basis correctly. Hope this helps save you from the hours of frustration I went through!
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