Taxable amount showing on backdoor Roth IRA conversion

Question

I converted $11,000 in IRA contributions to Roth IRA in 2024 ($4K in 2023 contributions and $7K in 2024 IRA contributions).  It was a total conversion.  It's showing that I owe tax on the difference between my conversion amount and the current year contributions ($11K-$7k=$4K).  What am I doing wrong?

TaxMorgan · Answer

Hello muel87,

If you had basis from nondeductible contributions in a prior year then you would want to make sure to enter that information on the IRA Basis and Value page in the IRA deductions section of our software.

You may find this community article about reporting a Backdoor Roth where the contribution and conversion were done in different years helpful.

Link url here: https://community.freetaxusa.com/kb/articles/172-reporting-a-backdoor-roth-conversion-after-december-31st-2024-and-later

If you are not able to find that or are still having trouble please reach out to customer support through your account as we will be able to view your account and assist you better.

muel77 · Answer

All of it was after tax.  I had basis left over from previous years as well

DaveT · Answer

How much of the converted money was attributed to pre-tax contributions? FreeTaxUSA should have asked for your basis which is the after-tax, non-deductible contributions. The amount converted in excess of your basis is fully taxable.