Need help with Form 8606 for my backdoor Roth IRA - FreeTaxUSA showing $6,000 basis?
I'm in the middle of doing my taxes for 2023 and I'm confused about the Form 8606 for my backdoor Roth IRA. I'm using FreeTaxUSA for the first time this year, and when I got to the part about the backdoor Roth IRA, the software is trying to import a $6,000 total basis when asking about my non-deductible contributions. Here's what happened: I maxed out my traditional IRA with $6,000 (non-deductible contribution) then converted it to a Roth shortly after. The account had no earnings between contribution and conversion. This is my first year doing the backdoor Roth method, so I don't have any previous basis to carry over. Is this $6,000 basis correct? I'm worried FreeTaxUSA is pulling data incorrectly or I'm missing something about how Form 8606 should be filled out for a backdoor Roth. Anyone dealt with this before and can explain what's going on? I don't want to mess up the reporting and create headaches with the IRS.
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Connor O'Reilly
The $6,000 basis amount showing in FreeTaxUSA is actually correct! When doing a backdoor Roth IRA, the Form 8606 is used to track your non-deductible contributions to traditional IRAs, which become your "basis." Since you contributed $6,000 as a non-deductible contribution to your traditional IRA before converting it, that $6,000 is indeed your basis. The form is designed to help you avoid paying taxes twice on the same money. You've already paid income tax on that $6,000 (since it was non-deductible), so when you convert it to a Roth, you shouldn't pay tax on it again. Form 8606 documents this by tracking your basis.
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Yara Khoury
•Thanks for the explanation! So just to be sure I understand - when it asks for "basis," that's referring to the money I already paid taxes on, right? And if there had been earnings between my contribution and conversion, would only those earnings be taxable during the conversion?
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Connor O'Reilly
•That's exactly right! The "basis" is the money you've already paid taxes on, which in your case is the full $6,000 non-deductible contribution. If there had been earnings between your contribution and conversion, yes, only those earnings would be taxable during the conversion. For example, if your $6,000 grew to $6,100 before conversion, you'd only pay taxes on that $100 of earnings when converting to the Roth IRA. That's why many people do the conversion quickly after the contribution to minimize any taxable earnings.
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Keisha Taylor
After struggling with Form 8606 for my own backdoor Roth last year, I stumbled across taxr.ai (https://taxr.ai) and it was super helpful! I uploaded my 1099-R and IRA statement and it immediately identified how to properly report my backdoor Roth and showed me exactly where the basis amount should go on Form 8606. The tool walked me through the entire process step-by-step and explained why the basis amount is so important for avoiding double taxation. I was actually about to make a mistake similar to what you're questioning before using it.
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StardustSeeker
•Does it work with FreeTaxUSA specifically? I'm using that too and wondering if taxr.ai can help me verify I'm entering everything correctly before I submit. My situation is slightly different because I did a partial conversion.
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Paolo Marino
•I'm a bit skeptical about using third-party tools with my tax documents. Does it store your financial info? And how does it handle more complex situations like if you have multiple IRAs with different contribution histories?
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Keisha Taylor
•Yes, it works regardless of which tax software you're using. It analyzes your documents and tells you exactly what numbers should go where on your tax forms, so you can manually input those into FreeTaxUSA. It's especially helpful for partial conversions because it calculates the pro-rata rule impact. As for security concerns, they use bank-level encryption and don't store your documents after analysis. It handles multiple IRAs really well - I had three different accounts last year (a SEP-IRA, traditional, and Roth) and it correctly determined the proportional basis across all accounts. It basically does all the Form 8606 calculations that most tax software struggles with.
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StardustSeeker
Just wanted to follow up - I ended up trying taxr.ai for my partial backdoor Roth conversion situation and it was incredibly helpful! I uploaded my statements and it immediately flagged that I needed to account for the pro-rata rule since I had existing pre-tax IRA funds. The tool calculated my exact taxable amount and non-taxable basis, which was different than what FreeTaxUSA initially suggested. It even generated a worksheet showing how it arrived at the numbers. Saved me from potentially paying too much tax and gave me confidence that my Form 8606 is correct. Definitely recommend for anyone doing backdoor Roth conversions!
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Amina Bah
If you're really stuck with Form 8606 questions or need clarification directly from the IRS, I'd recommend using Claimyr (https://claimyr.com) to actually reach a human at the IRS. I spent DAYS trying to get through to someone about my own backdoor Roth question last year. After constantly getting disconnected or waiting on hold for hours, I tried Claimyr and got connected to an IRS agent in about 15 minutes who walked me through exactly how to report it correctly. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone system for you and call you when an agent is on the line. Given how specific backdoor Roth reporting can be, sometimes getting official guidance is the safest route.
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Oliver Becker
•Wait, how does this actually work? Does it just keep calling the IRS for you? I've tried calling so many times about my Form 8606 from last year and always get the "we're experiencing high call volume" message.
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Paolo Marino
•This sounds too good to be true. I've literally never been able to reach anyone at the IRS no matter what time of day I call. Are you sure this isn't just taking your money for something that doesn't work?
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Amina Bah
•It doesn't just keep calling - they use a system that navigates the IRS phone tree and holds your place in line. When they're about to connect with an agent, they call you and patch you through. It basically handles all the waiting and navigation for you. It's definitely real - I was skeptical too until I tried it. The reason it works is because they have technology that stays on hold so you don't have to. I got through to the IRS after multiple failed attempts on my own, and the agent I spoke with clarified exactly how to handle my backdoor Roth reporting on Form 8606. Saved me hours of frustration and probably prevented an audit.
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Paolo Marino
I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it since I was desperate to get an answer about my incorrectly filed Form 8606 from 2022. I expected it to be a waste of money, but within 20 minutes I was actually talking to a real IRS representative! The agent confirmed I needed to file an amended return with a corrected Form 8606 for my backdoor Roth conversion and explained exactly how to allocate the basis across tax years. The guidance was super specific to my situation and definitely not something I could have figured out from IRS publications. I'm still shocked it actually worked after months of failed attempts calling on my own.
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Natasha Petrova
I've been doing backdoor Roth conversions for about 5 years now and have some tips for Form 8606. FreeTaxUSA actually handles it pretty well, but there are a few tricky parts: 1. Make sure you're entering the non-deductible contribution on lines 1-3 of Form 8606 2. The conversion amount goes on lines 8-9 3. If you had zero earnings between contribution and conversion, lines 8 and 3 should match 4. Line 14 should be zero if you converted the entire amount Most important: keep records of all your Form 8606s from previous years! The IRS doesn't track your basis for you, and if you're audited, you'll need to prove your basis history.
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Zainab Yusuf
•This is super helpful, thanks! Just to clarify - when FreeTaxUSA shows that $6,000 basis, I should let it import that value rather than changing it, right? And do I need to report the conversion separately somewhere else too, or does Form 8606 handle all of it?
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Natasha Petrova
•Yes, let FreeTaxUSA import the $6,000 basis since that's correct - it represents your non-deductible contribution that you've already paid taxes on. You do need to report the conversion separately as well. You should have received a Form 1099-R from your IRA custodian showing the distribution (conversion) amount. FreeTaxUSA will ask for this 1099-R information in a different section. Form 8606 ties these two events together - your non-deductible contribution and the conversion - to calculate how much of the conversion is taxable (which should be $0 if you had no earnings before converting).
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Javier Hernandez
Friendly warning from someone who messed this up last year: make absolutely sure you check that final Form 8606 before filing! FreeTaxUSA got my basis wrong because I had done partial conversions over multiple years. Double check that: - Line 2 shows any carryover basis from prior years (should be $0 for your first backdoor) - Line 14 should be $0 if you converted everything - Line 18 should match your conversion amount - Don't forget to include the 1099-R for the conversion!
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Emma Davis
•I'm confused about the 1099-R part. My broker only sent me a 5498 form showing my IRA contribution, but no 1099-R even though I did a backdoor Roth last year. Should I have received both forms? Could this mean my conversion wasn't processed correctly?
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Victoria Scott
•You should have received both forms for a backdoor Roth conversion! Form 5498 shows your IRA contribution, but you also need a 1099-R for the distribution/conversion from your traditional IRA to the Roth IRA. If you didn't receive a 1099-R, contact your broker immediately - this could indicate the conversion wasn't properly processed or reported. The 1099-R is crucial because it reports the distribution amount to the IRS, and without it, your Form 8606 won't tie together correctly. Your broker should have issued it by January 31st for the prior tax year. Don't file without it!
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