Confused By Excess Backdoor Roth

Day2Day

In 2/2024 I didnt realize that 12/31/23 was the deadline to do a backdoor roth for 2023, so I lump summed a backdoor roth for both 2023 and 2024.

This has resulted in an excess contribution of about $6500 that FreeTaxUSA has caught.

I've had that entire excess plus the gains removed from the account, but I want confirmation on how to indicate that in the software.

On the first step under "IRA Contributions" do I select "no" to 2023 Excess Contributions? Because this question seems to only apply to previous tax returns.

Then when I get to "Basis and Value" am I putting the excess contribution amount as my basis? Because if I just put 0 (I have no money in my Traditional IRA other than when I put in and immediately backdoor roth) it counts the excess contribution as taxable which isn't right.

Thank you in advance.

RyanZ

The deadline for making an IRA contribution is the due date of the tax return, including extensions, not the last day of the tax year.  See IRS Publication 590-A:  https://www.irs.gov/publications/p590a#en_US_2024_publink1000230428

You mentioned that you made the conversion from your Traditional IRA account to your Roth IRA account in February 2024, so this would have been timely if you intended for the contribution to be for tax year 2023.  If a single, conversion transaction was made, it would have been designated to either 2023 or 2024, not both.  Two separate conversion transactions would have been required for a designation to each year.

Here is a FreeTaxUSA Community article with an example of how you might enter your conversion into the software.

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

If your situation is different, we recommend that you log into your FreeTaxUSA account and contact Support for assistance with your specific situation.  The support team would be able to see what you have entered and provide you with guidance how to continue, to help you address the excess contributions.