The earlier submit Break up-Yr Backdoor Roth IRA in TurboTax, 1st Yr handled contributing to a Conventional IRA for the earlier 12 months and recharacterizing a earlier 12 months’s Roth IRA contribution as a Conventional IRA contribution. This submit handles the conversion half.
We cowl two instance situations. Right here’s the primary:
You contributed $6,500 to a Conventional IRA for 2023 in 2024. The worth elevated to $6,700 while you transformed it to Roth in 2024. You acquired a 1099-R kind itemizing this $6,700 Roth conversion.
You need to’ve already reported the contribution half in your 2023 tax return by following Break up-Yr Backdoor Roth IRA in TurboTax, 1st Yr. The IRA custodian despatched you a 1099-R kind for the conversion in 2024. This submit reveals you how one can put it into TurboTax.
Right here’s the second instance situation:
You contributed $6,500 to a Roth IRA for 2023 in 2023. You realized that your earnings was too excessive while you did your 2023 taxes in 2024. You recharacterized the Roth contribution for 2023 as a Conventional contribution earlier than April 15, 2024. The IRA custodian moved $6,600 out of your Roth IRA to your Conventional IRA as a result of your authentic $6,500 contribution had some earnings. The worth elevated once more to $6,700 while you transformed it to Roth in 2024. You acquired two 1099-R types, one for $6,600 and one other for $6,700.
You need to’ve already reported the recharacterized contribution in your 2023 tax return by following Break up-Yr Backdoor Roth IRA in TurboTax, 1st Yr. The IRA custodian despatched you two 1099-R types, one for the recharacterization, and the opposite for the conversion. This submit reveals you how one can put each of them into TurboTax.
In case you contributed for 2024 in 2025 or should you recharacterized a 2024 contribution in 2025, you’re nonetheless within the first 12 months of this journey. Please observe Break up-Yr Backdoor Roth in TurboTax, 1st Yr. In case you recharacterized your 2024 contribution in 2024 and transformed in 2024, please observe Backdoor Roth in TurboTax: Recharacterize & Convert, Identical Yr.
If neither of those instance situations matches you, please seek the advice of our information for a standard “clear” backdoor Roth: How To Report Backdoor Roth In TurboTax (Up to date).
In case you’re married and each you and your partner did the identical factor, it is best to observe the steps beneath as soon as for your self and as soon as once more in your partner.
Use TurboTax Obtain
The screenshots beneath are from TurboTax Deluxe downloaded software program. The downloaded software program is manner higher than on-line software program. In case you haven’t paid in your TurboTax On-line submitting but, you should purchase TurboTax obtain from Amazon, Costco, Walmart, and plenty of different locations and change from TurboTax On-line to TurboTax obtain (see directions for how one can make the change from TurboTax).
1099-R for Recharacterization
This part solely applies to the second instance situation. In case you didn’t recharacterize (the primary instance situation), please skip this part and leap over to the conversion part.
We deal with the 1099-R kind for recharacterization first. This 1099-R kind has a code ‘R’ in Field 7.
Go to Federal Taxes -> Wages & Earnings -> IRA, 401(okay), Pension Plan Withdrawals (1099-R).
Verify that you’ve got acquired a 1099-R kind. Import the 1099-R should you’d like. I’m selecting to sort it myself.
It’s a daily 1099-R.
The quantity that moved out of your Roth IRA to your Conventional IRA is proven in Field 1. The taxable quantity in Field 2a is zero. The 2 checkboxes in Field 2b aren’t checked. The code in Field 7 is “R.” The “IRA/SEP/SIMPLE” field below Field 7 might or might not be checked. It’s not checked in our pattern 1099-R.
That field is clean in our 1099-R, and that’s OK.
It’s regular to see zero in Field 2a and clean in Field 2b. TurboTax simply desires to double-check.
Not a Public Security Officer.
Once you’re doing taxes for 2024, likelihood is the 1099-R kind is for 2024. Click on on the button that matches the 12 months on the shape.
No Must Amend
That is pointless should you already reported the recharacterization within the earlier 12 months’s tax return as proven in our earlier submit. You solely have to amend your earlier tax return should you didn’t observe these steps.
You’re accomplished with the primary 1099-R kind. Click on on “Add One other 1099-R” so as to add the second should you don’t have already got each 1099-R types imported.
1099-R for Conversion
The second 1099-R kind can be a daily 1099-R.
It’s regular to see the conversion reported in Field 2a because the taxable quantity when Field 2b is checked to say “Taxable quantity not decided.” The code in Field 7 is ‘2‘ while you’re below 59-1/2 or ‘7‘ while you’re over 59-1/2. The “IRA/SEP/SIMPLE” field is checked on this 1099-R kind for the conversion.
It says that you simply don’t owe further tax on this cash. In case your refund meter drops, don’t panic. It’s regular and momentary.
It’s not a Roth SIMPLE or a Roth SEP.
We didn’t inherit it.
Transformed
First click on on “I moved …” then click on on “I did a mixture …” Enter the quantity you transformed to Roth within the field. It’s $6,700 in our instance. Don’t select the “I rolled over …” possibility. A rollover means Conventional-to-Conventional. Changing to Roth isn’t a rollover.
We didn’t put it in an HSA.
It wasn’t because of a catastrophe.
Now the 1099-R abstract consists of each 1099-R types. Hold going by clicking on “Proceed.”
No catastrophe distributions.
Foundation
Select “Sure.” In case you recharacterized a 2023 Roth IRA contribution in 2024, it counts as a nondeductible Conventional IRA contribution for 2023.
TurboTax ought to populate this worth from final 12 months’s return. It’s $6,500 in our instance. If it doesn’t auto-populate, get the worth out of your final 12 months’s Type 8606 Line 14, which was generated while you adopted the earlier submit Break up-Yr Backdoor Roth IRA in TurboTax, 1st Yr.
The refund meter goes up after you enter the full foundation.
That is usually zero should you transformed the whole lot. If in case you have a number of {dollars} left within the account from earnings posted after you transformed, enter the worth out of your year-end assertion within the first field.
Clear Backdoor Roth On High
In case you additionally did a “clear” backdoor Roth in 2024 on high of changing your contribution for 2023, in different phrases, you additionally contributed to a Conventional IRA for 2024 in 2024 and transformed each your 2023 contribution and your 2024 contribution in 2024, your 1099-R consists of changing two 12 months’s value of contributions in a single 12 months. All of the steps within the earlier part are nonetheless the identical besides that you’ve got a bigger quantity in your 1099-R kind.
The idea from the earlier 12 months’s tax return took care of one-half of the conversion. You additionally have to report your 2024 Conventional IRA contribution.
Skip this part should you didn’t contribute to a Conventional IRA for 2024.
Go to Federal Taxes -> Deductions & Credit -> Conventional and Roth IRA Contributions.
Examine the field for Conventional IRA since you contributed to a Conventional IRA.
If TurboTax gives an improve, decline it and select to proceed in TurboTax Deluxe.
Reply Sure right here to verify that you simply contributed to a Conventional IRA.
It was not a compensation of a retirement distribution.
Enter the quantity you contributed. Put zero within the second field since you contributed for 2024 in 2024. Your refund meter ought to go up now.
Transformed, Did Not Recharacterize
This can be a essential query. Reply “No.” You transformed the cash, not switched or recharacterized.
You could not get this query should you already entered your W-2 and it has Field 13 for the retirement protection checked. Reply sure should you’re lined by a retirement plan however the field in your W-2 wasn’t checked.
No extra contribution.
We answered this query earlier than however TurboTax asks once more. Select Sure.
TurboTax populates the identical reply as earlier than. It’s $6,500 in our instance.
Make It Nondeductible
TurboTax reveals this display if it sees that you simply qualify for a deduction for the Conventional IRA contribution. In case you take the deduction it’ll make your Roth conversion taxable, which creates a wash. It’s less complicated should you make your full IRA contribution nondeductible, after which your Roth conversion gained’t be taxable.
The IRA deduction abstract reveals a $0 deduction, which is anticipated.
Taxable Earnings
You’re accomplished with the 2 1099-R types. Let’s have a look at how they present up in your tax return. Click on on “Varieties” on the highest proper.
Discover Type 1040 within the left navigation panel. Scroll up or down on the suitable to search out strains 4a and 4b. They present a distribution from the IRA and solely $200 is taxable. That’s the earnings between the time you contributed to your Conventional IRA and the time you transformed it to Roth. The taxable quantity could be zero should you didn’t have any earnings.
Type 8606
Type 8606 reveals these for our instance:
| Line # | Quantity |
|---|---|
| 1 | 7,000 (provided that you additionally did a “clear” backdoor Roth on high, in any other case clean.) |
| 2 | 6,500 |
| 3 | The sum of Line 1 and Line 2 |
| 5 | The identical as Line 3 |
| 13 | The identical as Line 3 |
| 14 | 0 |
| 16 | The quantity in your 1099-R with a code 2 or 7 |
| 17 | The identical as Line 3 |
| 18 | The distinction between Line 16 and Line 17 |
Once you’re accomplished analyzing the shape, click on on Step-by-Step on the highest proper to return to the interview.
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