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Help Center  >  Individuals  >  Preparing Your Return  >  Retirement & Social Security

Form 8606 – Nondeductible Traditional IRA Contribution Converted to Roth IRA

A “Backdoor Roth IRA” is an informal term commonly used to describe making a nondeductible contribution to a Traditional IRA and then converting an amount from the Traditional IRA to a Roth IRA.  

IMPORTANT: The IRS does not use “Backdoor Roth IRA” as an official term for this transaction. 

The nondeductible Traditional IRA contribution is reported on Form 8606. The distribution from the Traditional IRA that is converted to a Roth IRA is reported on Form 1099-R and must also be entered in TaxAct. Form 8606 uses this information, along with any applicable IRA basis and other IRA amounts, to determine the taxable portion of the conversion. 

NOTE: If you have other Traditional, SEP, or SIMPLE IRA balances, part of the Roth conversion may be taxable. Form 8606 determines the nontaxable and taxable portions based on your IRA basis and other applicable IRA amounts. 

The Form 1099-R distribution data must be entered in TaxAct for Form 8606 to calculate correctly. If you need help entering Form 1099-R, go to our Form 1099-R – Entering Distributions from Retirement Plans FAQ. 

To enter this information in TaxAct, follow the steps below:  

TaxAct Online

  1. From within the TaxAct return, click Federal.
  2. Click Income, and then + Add Income.
  3. Click Retirement & Social Security to expand the drop-down list, and then select IRA, 401(k), Pension Plan Withdrawals 1099-R.
  4. Enter your form 1099-R details exactly as shown on the document you received from your financial institution.
    • Box 7 will generally display Code 2 or 7 for a Traditional IRA distribution converted to a Roth IRA. 
  5. When you reach the screen titled, Retirement Plan Income – Roth Conversion, enter the amount of the IRA distribution that was converted to a Roth IRA.
    • NOTE: Enter this amount only when asked for the Roth IRA conversion amount. Do not enter it as a rollover amount, as rollovers and Roth conversions are reported differently.
  6. You will be prompted to answer more IRA questions in order to figure the taxable versus after-tax portion. This is reported on Form 8606 (Nondeductible IRAs), which will be configured based off of your previous entries.
    • NOTE:  TaxAct will only display the Form 8606 Q&A screens that apply based on your previous entries. If you are unable to access the applicable Form 8606 screens, review your Form 1099-R entries and any information entered for nondeductible Traditional IRA contributions or prior-year IRA basis. 

Desktop

  1. From within the TaxAct return, click Federal.
  2. Click Income, and then + Add Income.
  3. Click Taxable IRA Distributions, then click Add New Copy of Federal Form 1099-R.
  4. Enter your form 1099-R details exactly as shown on the document you received from your financial institution.
    • Box 7 will generally display Code 2 or 7 for a Traditional IRA distribution converted to a Roth IRA. 
  5. When you reach the screen titled, Retirement Plan Income – Roth Conversion, enter the amount of the IRA distribution that was converted to a Roth IRA.
    • NOTE: Enter this amount only when asked for the Roth IRA conversion amount. Do not enter it as a rollover amount, as rollovers and Roth conversions are reported differently.
  6. You will be prompted to answer more IRA questions in order to figure the taxable versus after-tax portion. This is reported on Form 8606 (Nondeductible IRAs), which will be configured based off of your previous entries.
    • NOTE:  TaxAct will only display the Form 8606 Q&A screens that apply based on your previous entries. If you are unable to access the applicable Form 8606 screens, review your Form 1099-R entries and any information entered for nondeductible Traditional IRA contributions or prior-year IRA basis. 

The converted amount from 1099-R will be reflected on Form 8606, Line 16 and the taxable amount will appear on Form 8606, Line 18 which will then be transferred to Form 1040 U.S. Individual Income Tax Return, Line 4b.