pre-existing IRA to Roth IRA conversion + additional backdoor Roth in the same year

Question

I had a pre-existing IRA w/ 16k in it that I converted entirely to a Roth IRA in 2024.   Then I did my usual backdoor Roth IRA in 2024 of 7k.    So I need to pay taxes on the 16k.   How do I reflect this situation inside FreeTaxUSA when I'm doing my taxes this year.   Please help! Thanks

CoryF · Answer

Hello PerplexedParrot.

The article posted by Knittingfun is excellent in regards to the backdoor Roth process. However, your message included converting a traditional IRA without nondeductible basis to Roth. This is accomplished after entering the Form 1099-R with a box 7 code 2. FreeTaxUSA will ask if this was a rollover or an inherited IRA. The last question asks if you converted this distribution to Roth and provides a box to enter the amount of the 16,000. Entering the 16k will tell the software to add the 16k to your income to be taxed. When you look at your tax return Form 1040 you should see line 4a with the total of all converted distributions to Roth. In line 4b, you should see the 16k and this adds to your taxable income.

You are welcome to contact our Customer Support team by visiting the Support Center dropdown menu located at the upper right-hand corner of your account screen. This team can help you with the proper steps in a secure manner.

knittingfun · Answer

There's an article on Backdoor Roths that might be helpful! here.