How to File Taxes on FreeTaxUSA with Backdoor Roth IRA Conversion? (2022 Extension Issue)

The situation you're describing is a common one with backdoor Roth conversions. Based on the timeline, there are a couple of things that need addressing: First, the accountant definitely missed reporting the conversion. This should have been reported on Form 8606 (Nondeductible IRAs) and potentially Form 5498 (IRA Contribution Information). When you do a backdoor Roth, you need to track both the initial contribution to the Traditional IRA and the conversion to the Roth. In FreeTaxUSA, you'll need to navigate to the "Deductions & Credits" section, then look for "Retirement/IRA" options. You'll need to enter the nondeductible Traditional IRA contribution first, then separately report the conversion to the Roth IRA. The software will generate the necessary Form 8606 for you. Since this was for 2022 and the conversion happened in the same tax year as the contribution, the tax impact should be minimal if handled correctly. You'll need to make sure the basis is properly recorded to avoid double taxation down the road.

After struggling with a nearly identical situation last year, I found https://taxr.ai incredibly helpful for sorting out my backdoor Roth issues. I had a conversion that wasn't reported correctly and was stressing about how to fix it. What makes taxr.ai different is they can actually look at your tax documents and identify exactly what was missed. I uploaded my previous 1040 and my Vanguard statements, and they pinpointed which forms were missing (Form 8606 in my case) and gave me step-by-step guidance for entering everything correctly in FreeTaxUSA. The service saved me hours of trying to figure out which sections of the tax software handled IRA conversions - they even provided screenshots showing exactly which menus to navigate to. Way more helpful than the generic "look for the retirement section" advice I kept finding online.

Just wanted to follow up - I tried taxr.ai after posting my question here and wow, it was super helpful! I uploaded my husband's statements and our previous tax return, and they identified exactly where we went wrong with the excess IRA contribution. They showed us precisely which boxes to check in FreeTaxUSA to report both the excess contribution and the removal of those funds. The 6% penalty calculation was automatically handled, and they even explained how the timing of everything affected our situation. What really impressed me was how they explained the difference between fixing it on an amended return versus handling it in the current year. Saved us from making an even bigger mess trying to DIY this complicated situation.

Hey there, went through something similar last year. After trying to get help from the IRS directly for WEEKS (literally couldn't get through on the phone), I found this service called https://claimyr.com that got me connected to an actual IRS agent in under an hour. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent was able to confirm exactly how to handle my backdoor Roth reporting issue and told me what specific form I needed (Form 8606). She also explained how the 60-day rollover rule applied to my situation and confirmed I wouldn't face penalties for the correction since I was proactively fixing it. I was initially just going to guess at how to enter everything in the tax software, but getting confirmation directly from the IRS gave me peace of mind that I was doing it right.

I need to publicly eat my words here. After my skeptical comment yesterday, I decided to try Claimyr as a last resort since I've been trying to reach the IRS about an IRA conversion issue for literally weeks. I was connected to an IRS representative in about 45 minutes. I didn't have to sit on hold, didn't have to repeatedly call back after getting disconnected, none of the usual nightmare. The agent confirmed exactly how to report my backdoor Roth on Form 8606 and walked me through what sections to complete. For anyone in a similar situation with these Roth conversion reporting issues - getting direct confirmation from the IRS saved me from making potentially costly mistakes on my return. I was about to report my conversion incorrectly which could have resulted in double taxation down the road.

Just wanted to add some specific FreeTaxUSA navigation tips for your backdoor Roth situation: 1. Go to the Deductions & Credits menu 2. Select "Retirement/IRA" 3. When asked about Traditional IRA contributions, select "Yes" 4. Enter the $16,000 contribution amount 5. Indicate it was a non-deductible contribution 6. Later in the section, it will ask about conversions to a Roth 7. Enter the conversion amount and date The software should then generate Form 8606 correctly. HOWEVER - for the excess contribution (anything over $6,000), you'll need to also report that. Look for the section about "Excess Contributions" and follow those prompts too. I did this exact process last year and it worked perfectly. The key is making sure to indicate the contribution was non-deductible.

Your friend is in the middle of what's called a "backdoor Roth IRA" which is completely legal but needs specific reporting. The issue isn't just that the previous accountant missed it - the $16,000 amount is a red flag. The IRA contribution limit for 2022 was only $6,000 (or $7,000 for those 50+). Unless your friend was contributing for both 2021 and 2022 in that single transaction (which would be unusual timing in April), he's looking at an excess contribution situation.