How do I report my conversion from a Traditional IRA to a Roth IRA (Backdoor Roth)?

A backdoor Roth IRA strategy typically involves making a contribution to a Traditional IRA and then converting those funds to a Roth IRA. While the conversion itself is allowed, it's important to remember that a Traditional IRA to Roth IRA conversion is generally a taxable transaction.

To report the conversion correctly in the program, you'll need to complete two steps.

Step 1: Enter Form 1099-R

If you converted money from a Traditional IRA to a Roth IRA, you'll receive Form 1099-R reporting the distribution from your Traditional IRA account.

To enter Form 1099-R:

1. Go to Federal
2. Select Income (Select my forms)
3. Choose 1099-R, RRB, SSA
4. Select Add or Edit a 1099-R
5. Enter the information from your Form 1099-R

Important

The amount entered in Box 2a (Taxable Amount) depends on your specific IRA contributions and basis. You may need to complete Form 8606 to determine the correct taxable portion of the conversion.

Step 2: Complete Form 8606

Form 8606 is used to report nondeductible IRA contributions and Roth IRA conversions. If you converted funds from a Traditional IRA to a Roth IRA, the conversion must be reported in Part II of Form 8606.

Before Form 8606 can be completed, Form 1099-R must be entered into the program.

To access Form 8606:

1. Go to Federal
2. Select Deductions (Select my forms)
3. Choose Adjustments to Income
4. Select Nondeductible IRAs
5. Enter the amount converted as "Net amount converted from traditional, SEP, and SIMPLE IRAs to Roth IRAs in 20XX"
6. Review Form 8606 and enter the taxable amount in Box 2a of Form 1099-R if an adjustment is needed. To view Form 8606, navigate to Review > Summary using the menu on the left and view your PDF.

Important Notes About Form 8606

Form 8606 is primarily an informational form. Completing it does not automatically change the taxable amount reported on your Form 1099-R.

If your conversion is only partially taxable, you may need to manually adjust the taxable amount in Box 2a of your Form 1099-R entry so that it reflects the correct taxable portion of the distribution.

This is especially common when you've made nondeductible contributions to a Traditional IRA and have basis available to offset part of the taxable conversion amount.

What If I Didn't Convert the Entire Distribution?

You are not required to convert the entire Traditional IRA distribution to a Roth IRA. If only part of the distribution was converted, report only the amount that was actually converted on Form 8606.

The taxable portion of the conversion is determined under IRS rules and may depend on:

• Nondeductible IRA contributions you've made in prior years
• Your total IRA balances
• Any pre-tax amounts held in Traditional, SEP, or SIMPLE IRAs

Additional IRS Resources

For more information about Roth IRA conversions and Form 8606, see:

• Form 8606 Instructions (Nondeductible IRAs)
• IRS Publication 590-A, Individual Retirement Arrangements (IRAs)
• IRS Tax Topic 451, Individual Retirement Arrangements (IRAs)

Need Help Determining the Taxable Amount?

The taxable portion of a backdoor Roth conversion can vary depending on your IRA basis and any pre-tax IRA balances you own. Reviewing Form 8606 carefully can help ensure your conversion is reported accurately and that you're not paying tax on amounts that have already been taxed.