Backdoor Roth IRA for 2023

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shinesussy
shinesussy Member Newcomer

Hi,

Im in the middle of filling 2023 taxes and realized that I my MAGI will not qualify me for Roth IRA. I want to do Backdoor Roth IRA for 2023. Right now I do not have traditional IRA for 2023. Can I do Backdoor IRA for 2023 now? I could only find filing processes for same year contribution and conversions. What Is the filing process when contributing to traditional Ira for 2023 in 2024 and converting to Roth in 2024?

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  • RyanZ
    RyanZ FreeTaxUSA Agent
    edited March 28
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    Hello shinesussy, and welcome to the FreeTaxUSA Community!

    The process will depend if you already made a contribution to your Roth IRA for 2023.

    If you already made a contribution to your Roth IRA for 2023, you need to have it RECHARACTERIZED to a Traditional IRA account.

    If you have not made a contribution to your Roth IRA for 2023, you may make a contribution to a Traditional IRA up until the due date of the tax return.*

    To make a backdoor Roth contribution you will
    1) make a contribution to your Traditional IRA account (or recharacterize a 2023 contribution to a Roth IRA account)
    2) Convert the Traditional IRA contribution to a Roth IRA**
    3) in FreeTaxUSA, you will enter that you made a contribution to an IRA (this will differ whether you initially contributed to a Traditional or Roth account)
    4) indicate in the software that the contribution has (or will be) converted to a Roth IRA***
    NOTE: FreeTaxUSA only supports making a Back Door Roth when your income it TOO HIGH to make a contribution.

    Corrections:
    * Contributions made to a Traditional IRA made for a prior year will be reported as a Nondeductible IRA Contribution on the form 8606, which will be needed for the tax year in which you make the conversion
    ** The deadline for making a "conversion" is December 31 of the tax year; ie, you can't make a conversion for 2023 in 2024. The conversion in 2024 will be reported on the 2024 tax return.
    *** FreeTaxUSA only supports reporting a Back Door Roth when income is too high for a Roth IRA Contribution. At this time, we don't have an option of electing out of deducting a Traditional IRA Contribution

    Note: next year (in 2025) you will receive a form 1099-R for the conversion from the Traditional IRA to the Roth IRA in 2024, for the tax year 2023.

    Please contact your financial advisor or IRA account custodian for their specific procedures that you need to follow to accomplish this.

    If you need assistance with entering the information into the software, please contact us from the Support Center while logged into your FreeTaxUSA account.