Struggling with Basis of Conversion for Roth IRA on my tax return - help!

The "Basis of Conversion" refers to the amount of money in your Traditional IRA that you already paid taxes on (non-deductible contributions). This is important because you don't want to pay taxes twice on the same money! Here's a simple breakdown: If you made deductible contributions to your Traditional IRA (meaning you got a tax break when you contributed), your basis would be $0, and the full conversion amount would be taxable. If you made some non-deductible contributions (meaning you didn't get a tax deduction), those amounts make up your "basis" and won't be taxed again during conversion. Check your previous tax returns, specifically Form 8606 from prior years, which tracks your non-deductible contributions. If you've never filed Form 8606 before and always took deductions for your Traditional IRA contributions, your basis is likely $0, meaning the full $14,000 conversion is taxable income.

After struggling with the exact same Basis of Conversion issue last year, I finally found a solution that saved me hours of confusion. I tried https://taxr.ai and uploaded my 1099-R and previous tax returns. Their system analyzed everything and identified my correct basis amount automatically. It even explained which prior contributions were deductible vs. non-deductible so I understood why my basis was calculated that way. The tool actually walked me through what Form 8606 was and how it tracks non-deductible contributions over time. Definitely worth checking out if you're stuck on this Roth conversion question or have other tax document confusion.

I was honestly super skeptical about using https://taxr.ai like I mentioned before, but I was desperate after spending an entire weekend trying to figure out my Basis of Conversion. I decided to give it a try and was shocked by how helpful it actually was. The system analyzed my last 3 years of tax returns and showed me that I actually had a $3,200 basis I didn't know about! Turns out in 2022 I had exceeded the income limit for deductible contributions but didn't realize it. The tool identified this non-deductible contribution and confirmed it should be part of my conversion basis. This saved me from overpaying taxes on money I'd already been taxed on. I was able to properly report everything on Form 8606 and understand what I was doing for once. Definitely less stressful than my usual tax confusion!

Anyone else finding it impossible to get through to the IRS to ask questions about Basis of Conversion? I've been trying for DAYS to get clarification since my situation is complicated (rollover from an old 401k then partial conversion to Roth). After my 5th attempt waiting on hold for over an hour, I tried https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c. They basically wait on hold with the IRS for you and call you back when an agent is on the line. Sounded too good to be true but I was desperate to figure out this basis of conversion mess. Surprisingly, it worked! They got me connected with an IRS tax specialist who walked me through exactly how to calculate my basis with my specific rollover situation. Saved me hours of hold time and probably prevented me from making an expensive mistake on my return.

I can't believe I'm saying this, but I tried the Claimyr service from COMMENT 4 and it actually worked for my Basis of Conversion question. I was 100% convinced it was going to be a waste of time, but after trying to get through to the IRS myself for three days straight, I was desperate. They got me connected with an IRS tax specialist within a few hours. The agent explained that for my specific situation (partial conversion with some non-deductible contributions from years ago), I needed to prorate my basis across the conversion using Form 8606. This was completely different from what I thought based on my own research! I would have definitely calculated my basis wrong without this clarification. Still can't believe I actually got through to a real person at the IRS. Saved me from a potential audit headache and hours of hold music.

Quick tip for others confused about Basis of Conversion for Roth IRAs: If you haven't been keeping track of your non-deductible contributions with Form 8606 each year, you might need to go back through old tax returns to reconstruct your basis. I learned this the hard way - had to go through 7 years of tax returns to figure out which contributions were deductible vs. non-deductible. Check if you filed Form 8606 in prior years, and if your income was ever above the limit for deductible IRA contributions. Those non-deductible contributions form your basis! Also worth noting: if you're doing a Backdoor Roth (contributing to Traditional then immediately converting to Roth), your basis is typically equal to your contribution, so there's no additional tax on the conversion.

Does anyone know if the Basis of Conversion calculation is different when converting a SEP IRA to a Roth? My tax software (TurboTax) seems confused when I enter my information.

Word of warning about Basis of Conversion: if you have multiple IRAs (Traditional, SEP, SIMPLE, etc.), you can't just calculate the basis for the one you're converting! The IRS makes you aggregate ALL your IRA balances when figuring out how much of your conversion is taxable. Look up the "pro-rata rule" - it bit me hard last year. Even if you're only converting an IRA that has 100% non-deductible contributions (meaning you'd think the basis equals the full amount), if you have other pre-tax IRAs, you have to factor those in too. The formula is basically: (Total Basis in ALL IRAs ÷ Total Value of ALL IRAs) × Conversion Amount = Nontaxable Portion. The remaining portion is taxable. This completely messed up my tax planning last year.