Need Help Understanding Roth IRA Contribution Basis - Confused by Tax Software Warning

I'm finishing up my taxes using H&R Block's website and hit a snag during the final review. It's flagging something about my Roth IRA contribution basis as a problem. Honestly, this whole Roth IRA basis thing confuses me every single year when I'm doing my taxes, but this is the first time I've gotten an actual warning about it. The software is saying something about tracking my basis, but I have no idea what that even means or what I'm supposed to do with this information. I contribute about $5,000 to my Roth each year and have been doing so for maybe 4-5 years now. I've never withdrawn anything. Is this something I need to worry about? Does anyone know what this warning is actually telling me and what I need to do to fix it? I'm worried I've been doing something wrong all these years without realizing it.

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18 comments

Anastasia Sokolov

•8M

This is actually a common point of confusion with Roth IRAs. The "basis" refers to the total amount of contributions you've made to your Roth IRA over time. Unlike traditional IRAs, Roth contributions aren't tax-deductible when you make them, so you've already paid tax on that money. The reason tracking basis matters is for any potential early withdrawals. Since you've already paid tax on your contributions, you can withdraw your contributions (not earnings) from a Roth IRA at any time without tax or penalty. But to do this properly, you need to know your basis - the total amount you've contributed. The software is likely just warning you to keep track of your total contributions. It's not necessarily indicating you've done anything wrong, especially if you've never taken withdrawals. You might just need to confirm your contribution history or enter the prior year's basis amount somewhere in the software.

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Anastasia Sokolov

•8M

You generally don't need to report Roth IRA contributions on your tax return unless you're eligible for the Retirement Savings Contribution Credit (Saver's Credit) or if you've made excess contributions. The IRA custodian (where you have your Roth IRA account) reports your contributions to the IRS on Form 5498, but this is for informational purposes. As for tracking your basis, your IRA provider should maintain records of all your contributions, but it's always good practice to keep your own records as well. This can be as simple as a spreadsheet listing the date and amount of each contribution. Most financial institutions also provide year-end statements that show your contributions for the year.

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Zara Ahmed

•8M

I went through the exact same issue last year! H&R Block kept giving me warnings about my Roth IRA basis too. After hours of frustration, I finally found a solution using taxr.ai (https://taxr.ai). It's this really helpful tool that analyzes your tax forms and helps identify issues like this. For my situation, it turned out I needed to enter my cumulative Roth contribution amount from previous years in a specific field that wasn't obvious in H&R Block. The taxr.ai system analyzed my previous returns and showed me exactly where to enter this information. It also explained that the basis tracking is mainly important if you ever make withdrawals before retirement age.

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Zara Ahmed

•8M

Yes, it works with all the major tax software including TurboTax. I've used both H&R Block and TurboTax in different years, and taxr.ai helped with interpreting the results from both. With regard to security concerns, you do upload your tax documents, but they use the same level of encryption as banks and tax preparation services. You can also just upload the specific forms you need help with rather than your entire return. I was hesitant at first too, but I researched their security protocols before using it, and they're quite transparent about how they protect your information.

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Luca Esposito

•8M

I wanted to follow up about my experience with taxr.ai after asking about it earlier. I decided to give it a try with my Roth IRA basis confusion, and I'm actually really glad I did. The system identified that I had been inconsistently tracking my contributions across tax years, which was causing the warnings. What surprised me was how quick it was - it took my previous year's return, analyzed the Roth contribution sections, and explained in plain English where the discrepancy was. In my case, I needed to enter a cumulative total of $17,500 in contributions (my total from 2019-2023) in a specific field that I had been leaving blank. Once I did that, the warning disappeared! Definitely saved me from what would have been hours more frustration.

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Nia Thompson

•8M

If you're still having issues with your Roth IRA basis after trying software fixes, you might want to consider calling the IRS directly. I know, I know - the thought of waiting on hold for hours is terrible! But I recently discovered a service called Claimyr (https://claimyr.com) that actually calls the IRS for you and then connects you once they get a human on the line. They have a demo of how it works here: https://youtu.be/_kiP6q8DX5c I had a similarly confusing issue with Roth contribution tracking across multiple years, and I needed clarification on how to correctly report everything. Used Claimyr and got connected to an IRS agent in about 20 minutes (instead of the 2+ hours I spent the last time I tried calling). The agent was able to pull up my records and confirm my contribution history, which solved my problem completely.

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Nia Thompson

•8M

They use an automated system that navigates the IRS phone tree and waits on hold for you. When they finally get a human, you get a call connecting you to that agent. No more listening to the hold music for hours. The IRS agents actually can be very helpful with specific questions like Roth IRA basis issues. You're right that some agents just read from scripts, but I've found that if you have a specific, technical question (like Roth IRA basis calculation), you'll often get connected to someone who knows what they're talking about. The key is having your information ready and asking clear, specific questions.

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Aisha Abdullah

•8M

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway because I was desperate to fix my Roth IRA basis issue before filing. I was honestly shocked when I got a call back in about 30 minutes connecting me to an actual IRS tax specialist. The agent pulled up my records and confirmed I'd been making contributions for the past 6 years. She explained that the software warning was happening because I needed to report my cumulative basis, not just the current year contribution. She walked me through exactly which form and which line to use in my tax software. Problem solved in one phone call after years of confusion! I've spent more time on hold with my internet provider than it took to get this tax issue resolved.

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Ethan Wilson

•8M

It's a bit buried in the interface. After you get to the "IRA, 401(k), or Other Retirement Plans" section, you need to click on the specific Roth IRA contribution entry. Then there should be an "Advanced" or "Additional Information" button or link. Click that and you'll see additional fields, including one for your previous years' contributions or basis amount. If you're using the desktop version rather than the online version, the navigation might be slightly different, but the concept is the same - look for an advanced or additional info section related to your Roth IRA entries.

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