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I moved $5500 from traditional IRA to Roth IRA in January 2014 for tax year 2013 . Then I moved another $5500 from traditional to Roth IRA for tax year 2014 in March 2014. When depositing fund in IRA, I had checked the option of non deductible contribution.

This year when I get the tax statement from my service provide they mention this amount as

Form showing "Gross distribution" and "Taxable amount" values

Form 5498 received from provider:

3.Roth IRA conversion amount................................$11,043.66

5.Fair market value of account..............................$11,584.07

7.IRA Type..................................................ROTH IRA

Now when I enter this data in TurboTax, it increases my taxes.

I called by the custodian company and they say that 1099-R and 5498 knock each other out so I should not be worrying about tax. But TurboxTax thinks otherwise.

I am not asking for a tax advice, but somehow it looks to me that either I have made a mistake while moving the money, or my tax statement is incorrect?

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2 Answers 2

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You probably entered it wrong in TurboTax.

Distribution code "2" should have triggered some more questions in the TurboTax, but I don't know exactly how it works there. Bottom line is that you need to add form 8606 to your return.

Here's something on Intuit forums that tells you how to get to it.

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To report backdoor Roth IRA contributions in TurboTax, you have to fill in two completely separate places:

  1. Wages & Income -> Retirement Plans and Social Security -> Retirement Plans and Social Security
  2. Deductions & Credits -> Retirement and Investments -> Traditional and Roth IRA Contributions

After you fill out #1, your "taxes" will seem to increase, but go back down when you fill out #2, if you fill it out correctly. You have to make sure to answer all the questions literally, in order to correctly calculate the basis from the previous year.

Unfortunately, this is one of the things that's easier to do by hand (just filling out Form 8606) than using one of these software products. Backdoor Roth IRA is one of those things "the average Joe" doesn't do, so the software product doesn't optimize for it.

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