Why are my Backdoor Roth IRA Contributions showing up as income on TurboTax? W2 income + conversion question

You definitely need Form 8606! This is exactly why your taxes are showing incorrectly. The 1099-R only shows that you took money out of your Traditional IRA (the conversion part), but without Form 8606, the IRS doesn't know that it was nondeductible contributions. TurboTax should absolutely be prompting you for Form 8606, but sometimes it misses this. You need to manually add it. Look under the Forms section or search specifically for "8606" in TurboTax. This form is where you report nondeductible contributions to a Traditional IRA. On Form 8606, you'll show that your Traditional IRA contribution was made with after-tax money, which establishes your "basis" in the IRA. This prevents that money from being taxed again when you convert to a Roth IRA. Without this form, the IRS assumes all money converted was pre-tax (deductible) contributions, which is why you're seeing an increase in your taxable income. The only part that should potentially be taxable is any earnings that occurred between the time you made the contribution and when you converted it. Since you converted quickly, this should be minimal (the $2.15 difference between your $6000 contribution and the $6002.15 distribution).

I just went through this exact situation last month! After struggling for hours, I found an amazing tool that saved me a ton of headache - https://taxr.ai - which analyzed my 1099-R and other tax docs and immediately identified the Backdoor Roth issue. The problem is that TurboTax doesn't automatically connect the dots between your non-deductible Traditional IRA contribution and the conversion to Roth. For me, taxr.ai spotted that my Form 8606 was missing entirely. Once I added it (manually in TurboTax), my tax bill dropped by over $1400! The tool explained that without Form 8606, the IRS treats your entire conversion as taxable income, which is exactly what's happening to you. It actually gave me step-by-step instructions on how to properly report everything.

I was super skeptical about trying another service since I was already using TurboTax, but after seeing another comment here, I gave https://taxr.ai a shot with my Backdoor Roth documentation. I uploaded my 1099-R and it immediately flagged that I needed Form 8606 for my backdoor Roth conversion. The analysis showed exactly why TurboTax was calculating an extra $1100 in taxes I didn't actually owe. The step-by-step guidance helped me locate where to manually add Form 8606 in TurboTax (which was NOT intuitive at all). After adding the form and inputting my non-deductible contribution, my tax bill instantly dropped back to what I was expecting. Worth every penny for the peace of mind alone, and saved me way more than it cost. I'll definitely be using it again next year when I do another backdoor Roth.

I had almost the exact same problem last year. After trying for DAYS to reach someone at the IRS to confirm I was doing this right (impossible to get through), I found https://claimyr.com and used their service to get connected to an IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that I absolutely needed Form 8606 and walked me through how to make sure my backdoor Roth was properly documented. She explained that without the 8606, the system has no way to know that the money was already taxed, so it treats the entire conversion as taxable income. TurboTax is honestly terrible with backdoor Roth situations - they should automatically prompt for Form 8606 when they see a conversion, but they don't. Getting direct confirmation from the IRS saved me from paying taxes twice on the same money.

I thought this Claimyr thing sounded like a rip-off, but after spending THREE DAYS trying to reach the IRS myself about my backdoor Roth situation, I finally gave in and tried it. Wow. Within 20 minutes I was talking to an actual IRS agent who confirmed everything about Form 8606 and the backdoor Roth process. They walked me through exactly what I needed to do in TurboTax to fix my return. The agent explained that this is one of the most common issues they see with self-prepared returns - people doing backdoor Roth conversions without properly documenting the non-deductible contribution on Form 8606. For anyone dealing with this same issue - yes, you need Form 8606, and yes, getting confirmation directly from the IRS is incredibly helpful. Can't believe I wasted days trying to get through when this service had me connected in minutes.

I see lots of people mentioning Form 8606, but nobody has clearly explained WHAT to enter on it. Here's exactly what you need to do: On Form 8606: - Part I is where you report your nondeductible contribution to the Traditional IRA - Line 1 would be your $6000 contribution - Lines 2-3 about basis would be zero if this is your first time - Complete the calculation through line 14 - Part II is for the conversion to Roth IRA - Line 16 would be your total distribution ($6002.15) - The calculations will show that only the $2.15 in earnings is taxable You should end up with line 18 showing just the small amount of earnings as taxable, NOT your entire contribution. This matches your 1099-R but tells the IRS that most of it was already taxed money.

Happened to me last year too! Just want to clarify something - the small earnings between contribution and conversion ($2.15 in your case) ARE actually taxable. You have to pay tax on that tiny bit of growth. But the original $6000 contribution is NOT taxable again as long as you document it properly with Form 8606. If you don't file Form 8606, the IRS has no way to know that you already paid tax on that money, which is why TurboTax is calculating additional tax on the full amount. The form establishes your "basis" (already-taxed amount) in the Traditional IRA.