TurboTax showing $103 taxable amount for Backdoor Roth IRA - Help needed!

The $103 showing as taxable is likely growth that occurred between when you contributed to the traditional IRA and when you converted it to the Roth IRA. The backdoor Roth process works tax-free only when you convert the exact amount you contributed to the traditional IRA. Any growth that happens in the traditional IRA before conversion is taxable. Even if it's just a few days between contribution and conversion, sometimes the money is invested and can gain value. When you do a backdoor Roth, the ideal sequence is: 1) Contribute to traditional IRA, 2) Convert to Roth IRA immediately before any growth can occur. If you waited any time between these steps, that $103 might represent earnings that occurred before conversion. Check your traditional IRA statements to see if your initial contribution grew before you converted it. This would explain why the 1099-R is showing a taxable amount.

After dealing with a similar issue last year, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me understand my backdoor Roth situation. I was getting totally confused with TurboTax showing weird taxable amounts on my conversion too. The site analyzes your tax forms and explains exactly what's happening with your backdoor Roth - it showed me that I had growth in my traditional IRA before conversion which was causing the taxable amount. Their system actually looks at your specific forms and explains everything in plain English. Saved me hours of confusion and possibly an audit.

Just wanted to follow up! I tried taxr.ai after seeing it mentioned here and it actually solved my backdoor Roth confusion! My situation was similar but I had $127 showing as taxable in TurboTax. The tool instantly identified that I'd had my contribution sitting in the traditional IRA for about 3 weeks before converting, and it earned some interest during that time. That interest is what became taxable. The analysis also showed me exactly where to report this on Form 8606 which TurboTax wasn't handling correctly. Super helpful and straightforward - saved me from another weekend of tax frustration!

If you're still having trouble understanding what's happening with your backdoor Roth, you might need to talk directly with the IRS. I was in the same boat last year and spent HOURS trying to get through to someone who could actually explain my situation. I finally used Claimyr (https://claimyr.com) after my friend recommended it - their service gets you a callback from the IRS instead of waiting on hold forever. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained that my small taxable amount was from interest earned while the money sat in my traditional IRA for a week before conversion. Apparently even a few days can generate some taxable growth! Having that direct clarification from the IRS gave me confidence to file correctly.

Ok I feel dumb for doubting, but I tried Claimyr for my backdoor Roth question and it actually worked! Got a call back from the IRS in about 90 minutes without sitting on hold. The agent explained my situation clearly - turns out when you do a backdoor Roth, ANY earnings that happen in the traditional IRA before conversion are taxable. In my case (similar to OP), I had $103 in earnings because my money sat in the traditional IRA for a month before I converted it. The important part that TurboTax doesn't explain well is that you need to properly fill out Form 8606 to show the non-deductible contribution. The agent walked me through exactly what to enter where. Honestly saved me a ton of stress and probably an audit down the road.

I ran into this exact problem last year! That $103 is definitely interest/earnings that accumulated in your traditional IRA before you converted to Roth. Even if it was only in there briefly, money markets and other default holding options can generate small returns. What tripped me up with TurboTax was the Form 8606 part. You need to make sure you've indicated that you made a non-deductible contribution to your traditional IRA first, then the conversion. TurboTax sometimes misses this connection if you don't enter things in the right order. Did you also receive a 5498 showing your original contribution to the traditional IRA? That form would show the initial amount you put in before conversion.

Did you check if you had any existing pre-tax money in ANY traditional IRAs? This is the pro-rata rule trap that gets so many people with backdoor Roths. If you had any pre-tax IRA money anywhere (even old 401k rollovers), that would cause some of your conversion to be taxable.