The previous post Split-Year Backdoor Roth IRA in TurboTax, 1st Year dealt with contributing to a Traditional IRA for the previous year and recharacterizing a previous year’s Roth IRA contribution as a Traditional IRA contribution. This post handles the conversion part.
We cover two example scenarios. Here’s the first:
You contributed $6,000 to a Traditional IRA for 2022 in 2023. The value increased to $6,200 when you converted it to Roth in 2023. You received a 1099-R form listing this $6,200 Roth conversion.
You should’ve already reported the contribution part on your 2022 tax return by following Split-Year Backdoor Roth IRA in TurboTax, 1st Year. The IRA custodian sent you a 1099-R form for the conversion in 2023. This post shows you how to put it into TurboTax.
Here’s the second example scenario:
You contributed $6,000 to a Roth IRA for 2022 in 2022. You realized that your income was too high when you did your 2022 taxes in 2023. You recharacterized the Roth contribution for 2022 as a Traditional contribution before April 15, 2023. The IRA custodian moved $6,100 from your Roth IRA to your Traditional IRA because your original $6,000 contribution had some earnings. The value increased again to $6,200 when you converted it to Roth in 2023. You received two 1099-R forms, one for $6,100 and another for $6,200.
You should’ve already reported the recharacterized contribution on your 2022 tax return by following Split-Year Backdoor Roth IRA in TurboTax, 1st Year. The IRA custodian sent you two 1099-R forms, one for the recharacterization, and the other for the conversion. This post shows you how to put both of them into TurboTax.
If you contributed for 2023 in 2024 or if you recharacterized a 2023 contribution in 2024, you’re still in the first year of this journey. Please follow Split-Year Backdoor Roth in TurboTax, 1st Year. If you recharacterized your 2023 contribution in 2023 and converted in 2023, please follow Backdoor Roth in TurboTax: Recharacterize & Convert, Same Year.
If neither of these example scenarios fits you, please consult our guide for a normal “clean” backdoor Roth: How To Report Backdoor Roth In TurboTax (Updated).
If you’re married and both you and your spouse did the same thing, you should follow the steps below once for yourself and once again for your spouse.
Use TurboTax Download
The screenshots below are from TurboTax Deluxe downloaded software. The downloaded software is way better than online software. If you haven’t paid for your TurboTax Online filing yet, you can buy TurboTax download from Amazon, Costco, Walmart, and many other places and switch from TurboTax Online to TurboTax download (see instructions for how to make the switch from TurboTax).
1099-R for Recharacterization
This section only applies to the second example scenario. If you didn’t recharacterize (the first example scenario), please skip this section and jump over to the conversion section.
We handle the 1099-R form for recharacterization first. This 1099-R form has a code ‘R’ in Box 7.
Go to Federal Taxes -> Wages & Income -> IRA, 401(k), Pension Plan Withdrawals (1099-R).
Confirm that you have received a 1099-R form. Import the 1099-R if you’d like. I’m choosing to type it myself.
It’s a regular 1099-R.
The amount that moved from your Roth IRA to your Traditional IRA shows in Box 1. The taxable amount in Box 2a is zero. The two checkboxes in Box 2b aren’t checked. The code in Box 7 is “R.” The “IRA/SEP/SIMPLE” box under Box 7 may or may not be checked. It’s not checked in our sample 1099-R.
That box is blank in our 1099-R, and that’s OK.
It’s normal to see zero in Box 2a and blank in Box 2b. TurboTax just wants to double-check.
Not a Public Safety Officer.
When you’re doing taxes for 2023, chances are the 1099-R form is for 2023. Click on the button that matches the year on the form.
No Need to Amend
This is unnecessary if you already reported the recharacterization in the previous year’s tax return as shown in our previous post. You only need to amend your previous tax return if you didn’t follow those steps.
You’re done with the first 1099-R form. Click on “Add Another 1099-R” to add the second one if you don’t already have both 1099-R forms imported.
1099-R for Conversion
The second 1099-R form is also a regular 1099-R.
It’s normal to see the conversion reported in Box 2a as the taxable amount when Box 2b is checked to say “Taxable amount not determined.” The code in Box 7 is ‘2‘ when you’re under 59-1/2 or ‘7‘ when you’re over 59-1/2. The “IRA/SEP/SIMPLE” box is checked on this 1099-R form for the conversion.
It says that you don’t owe extra tax on this money. If your refund meter drops, don’t panic. It’s normal and temporary.
It’s not a Roth SIMPLE or a Roth SEP.
Did not inherit it.
Converted
First click on “I moved …” then click on “I did a combination …” Enter the amount you converted to Roth in the box. Don’t choose the “I rolled over …” option. A rollover means Traditional-to-Traditional. Converting to Roth isn’t a rollover.
Didn’t put it in an HSA.
Not due to a disaster.
Now the 1099-R summary includes both 1099-R forms. Keep going by clicking on “Continue.”
No disaster distributions.
Basis
Choose “Yes.” If you recharacterized a 2022 Roth IRA contribution in 2023, it counts as a nondeductible Traditional IRA contribution for 2022.
TurboTax should populate this value from last year’s return. It’s $6,000 in our example. If it doesn’t auto-populate, get the value from your last year’s Form 8606 Line 14, which was generated when you followed the previous post Split-Year Backdoor Roth IRA in TurboTax, 1st Year.
The refund meter goes up after you enter the total basis.
This is normally zero if you converted everything. If you have a few dollars left in the account from earnings posted after you converted, enter the value from your year-end statement in the first box.
Clean Backdoor Roth On Top
If you also did a “clean” backdoor Roth in 2023 on top of converting your contribution for 2022, in other words, you also contributed to a Traditional IRA for 2023 in 2023 and converted both your 2022 contribution and your 2023 contribution in 2023, your 1099-R includes converting two year’s worth of contributions in a single year. All the steps in the previous section are still the same except that you have a larger amount on your 1099-R form.
The basis from the previous year’s tax return took care of one-half of the conversion. You also need to report your 2023 Traditional IRA contribution.
Skip this section if you didn’t contribute to a Traditional IRA for 2023.
Go to Federal Taxes -> Deductions & Credits -> Traditional and Roth IRA Contributions.
Check the box for Traditional IRA because you contributed to a Traditional IRA.
If TurboTax offers an upgrade, decline it and choose to continue in TurboTax Deluxe.
Answer Yes here to confirm that you contributed to a Traditional IRA.
It was not a repayment of a retirement distribution.
Enter the amount you contributed. Put zero in the second box because you contributed for 2023 in 2023. Your refund meter should go up now.
Converted, Did Not Recharacterize
This is a critical question. Answer “No.” You converted the money, not switched or recharacterized.
You may not get this question if you already entered your W-2 and it has Box 13 for the retirement coverage checked. Answer yes if you’re covered by a retirement plan but the box on your W-2 wasn’t checked.
No excess contribution.
We answered this question before but TurboTax asks again. Choose Yes.
TurboTax populates the same answer as before. It’s $6,000 in our example.
Make It Nondeductible
TurboTax shows this screen if it sees that you qualify for a deduction for the Traditional IRA contribution. If you take the deduction it’ll make your Roth conversion taxable, which creates a wash. It’s simpler if you make your full IRA contribution nondeductible, and then your Roth conversion won’t be taxable.
The IRA deduction summary shows a $0 deduction, which is expected.
Taxable Income
You’re done with the two 1099-R forms. Let’s look at how they show up on your tax return. Click on “Forms” on the top right.
Find Form 1040 in the left navigation panel. Scroll up or down on the right to find lines 4a and 4b. They show a distribution from the IRA and only $200 is taxable. That’s the earnings between the time you contributed to your Traditional IRA and the time you converted it to Roth. The taxable amount would be zero if you didn’t have any earnings.
Form 8606
Form 8606 shows these for our example:
| Line # | Amount |
|---|---|
| 1 | 6,500 (only if you also did a “clean” backdoor Roth on top, otherwise blank.) |
| 2 | 6,000 |
| 3 | The sum of Line 1 and Line 2 |
| 5 | The same as Line 3 |
| 13 | The same as Line 3 |
| 14 | 0 |
| 16 | The amount on your 1099-R with a code 2 or 7 |
| 17 | The same as Line 3 |
| 18 | The difference between Line 16 and Line 17 |
When you’re done examining the form, click on Step-by-Step on the top right to go back to the interview.
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andrea boboc says
Very helpful and informative, is being unofficially used by Turbotax experts as guidance. Thank you
Rahul says
Very helpful. I am stuck though. I converted 2022 and 2023 contributions in 2023. As mentioned by you in the last section, my 1099-R has two years worth of contribution and so the software makes $6,500 (2023 contribution) taxable. I have also declared 2023 Traditional IRA distribution in that section but that does not bring down the taxes. Would appreciate if you can help. Using online Turbo tax
Harry Sit says
If you meant that you also declared a 2023 Traditional IRA *contribution*, did the IRA deduction summary or Schedule 1 Line 20 show it was deductible? See the “Conversion is Taxed” part in the Troubleshooting section in our guide for the clean backdoor Roth. It’s better to use downloaded TurboTax because you can see what’s going on by looking at the forms. It’s more difficult to troubleshoot in online TurboTax.
Rahul says
Thanks for responding. Deleting and uploading the form again worked. The online version is buggy as hell
ET says
Hello!
If my situation was as below:
1) Contributed to Roth in calendar year 2023 for tax year 2023.
2) Contributed to Roth in calendar year 2024 for tax year 2024.
3) Recharacterized Roth contribution for tax year 2023 to Trad IRA in 2024 and completed backdoor process in 2024.
4) Recharacterized Roth contribution for tax year 2024 to Trad IRA in 2024 and completed backdoor process in 2024.
My understanding is that for filing 2023 taxes, I will follow the provided “Backdoor Roth in TurboTax: Recharacterize and Convert, 1st Year”.
However, for filing 2024 taxes next year, would I need to use the instructions in this article, “Backdoor Roth in TurboTax: Recharacterize and Convert, 2nd Year” and blend it with the instructions of the article “Backdoor Roth in TurboTax: Recharacterize & Convert, Same Year” since I had to recharacterize from Roth contribution to Trad IRA contribution then complete the backdoor process again in 2024 but did not do a late conversion this year?
Thank you so much for your assistance. These articles have been extremely helpful.
Harry Sit says
You got it! It’ll be much easier when you get on the “clean” track in 2025.
ET says
Hi Harry,
Thank you so much for confirming. For 2024’s tax filing, would I then be receiving 3 1099-Rs? 1 x 1099-R for the 2024 conversion and 2 other 1099-Rs, 1 for 2023 recharacterization and 1 for 2024?
Thank you!
Harry Sit says
That’s right. The 1099-R for the conversion will show the combined amount. You enter it only once by following the “2nd year” guide.
SD says
Hi Harry,
I’m following your guides for reporting a split-year backdoor Roth, but I can’t figure out what to do next for my specific situation:
1. I contributed $6500 to a Traditional Roth in 2023 for 2023 (and am reporting this according to year 1 of your guide).
2. I haven’t yet converted. I know I still have a little bit of time before the deadline. The thing is, I have more than just the $6500 in my traditional IRA from past contributions and all the money has been invested since January 2024. It hasn’t earned a lot, but it’s earned a little bit of money. I can’t figure out whether it makes sense to convert the entire account, convert only the $6500 I contributed specifically to convert… or what. I’m confused. Either way, I know I will owe taxes on the income. Do you have any advice? Thank you for your time & for writing these articles.
Harry Sit says
Just convert 100% of the money in the account. If you have the money to make the 2024 contribution now, contribute it and convert the larger sum. If you’ll contribute for 2024 later this year, convert again at that time (but don’t let it go past 12/31, otherwise you’ll be in the split situation again). There’s no limit on how much you can convert in a year or how many times you can convert in a year.
GC says
Hi Harry, I just discovered this strategy. Objective:
1. contribute $6500 for 2023 in 2024 by April 15th to a new traditional IRA
2. contribute $7000 for 2024 in 2024 to this new traditional IRA
3. move existing IRA to a 401k in 2024 (both 100% pretax dollars). For sake of argument, lets say it is $50,000 now, but originated from a 401k rollover of $30,000 prior.
4. do a Roth conversion of the new traditional IRA $13,500 in 2024.
Since #3 hasn’t been done yet, but planned for 2024, what are the implications for the 8606 for both 2023 and 2024? Line 6 Dec. 31 2023 value will be nonzero but not entered? Dec. 31 2024 will not include the original IRA?
Line 2 8606 total basis is confusing. What do I enter for line 2 in 2023 (50,000? 30,000?) and 2024? Since 2023 will not entail a conversion, I only fill out lines 1,2,3 on the 2023 form, not needing to fill in line 6, so no tax due. But in 2024, I will need to fill in the whole form. Will the 2024 line 2 be $6,500 or include some of the 50,000 or 30,000? Line 1 will be 7,000. Line 6 will be zero?
Harry Sit says
Please follow Split-Year Backdoor Roth IRA in TurboTax, 1st Year for your (1) contribute $6500 for 2023 in 2024 by April 15th to a new traditional IRA. TurboTax will generate Form 8606 with $6,500 on Lines 1, 3, and 14.
Come back to follow this post next year when you do your taxes for 2024. TurboTax will generate Form 8606 as shown near the end of this post. Tax basis isn’t the same as cost basis. An IRA with only pre-tax money has no basis.
GC says
Thank you Harry. So for the 2023 8606 Line 1=$6500;
But Line 2=zero? You mention “An IRA with only pre-tax money has no basis”.
Therefore I don’t report the value of the existing IRA now worth $50,000 anywhere on the 2023 8606? And by 2024, it will have been moved to a 401k therefore it also won’t be reported on the 2024 8606.
Harry Sit says
That’s correct. No basis means the basis is zero.
MRK says
Hi Harry,
I did contribute $6500 for 2023 in 2024 under Traditional IRA and converted to Backdoor Roth IRA in 2024. I didnt have any earnings on this amount. While filing tax returns, I did follow 1st year article to show the contribution in turbotax. But I see around $400 tax increased on my due. Ideally I should not owe any extra tax right? can you please help clarify and how to get rid of this? I am using Turboax online
Harry Sit says
Please double check against every step in the “1st year” post. If you mistakenly said you recharacterized it, it creates a 6% exercise tax, which is $390 on $6,500.
It’s difficult to troubleshoot in TurboTax Online because you can’t see the forms before you pay. You don’t know where to fix when you don’t know where the $400 came from. Buy TurboTax download software from Amazon next year.
KJ says
Harry,
Thank you for publishing these clear TurboTax IRA guides. You have saved me a lot of time! I am one who fell into the Roth –> recharacterize –> convert path, and I was initially concerned that I would need to amend my previous year’s taxes!
Keep up the good work, and I’m glad to see that your blog is being recognized for the contributions.
A.Specter says
This is my second year doing a Backdoor Roth. My basis for 2022 was $6000. In 2023, I contributed $6015, all post-tax/non-deductible. My 1099-R for 2023 shows a gross distribution of $7011.
And yet the updated basis (line 14 on my 2023 8606) is $5003. Isn’t line 14 supposed to be cumulative? Every contribution I have made to my IRA is non-deductible, so I expected by updated basis this year to be $1215. I am completely befuddled at how it actually decreased (from $6000 in 2022 to $5003 in 2023).
Harry Sit says
No, it’s not supposed to be cumulative. New nondeductible contributions add to basis, and conversions use up part of basis.
Catch up in 2024 by contributing for 2024 in 2024 and converting in 2024. Get out of all this confusion about basis.
A.Spector says
Thank you so much