Easy methods to Report 2024 Backdoor Roth In FreeTaxUSA (Up to date)

[Updated on January 30, 2025 with screenshots from FreeTaxUSA for the 2024 tax year.]

TurboTax and H&R Block are the 2 main tax software program for submitting private tax returns. A low-cost different to TurboTax and H&R Block software program is FreeTaxUSA. FreeTaxUSA isn’t solely for easy returns. It may possibly nonetheless deal with extra advanced transactions, such because the Backdoor Roth.

Simply as a refresher, a Backdoor Roth entails making a non-deductible contribution to a Conventional IRA adopted by changing from the Conventional IRA to a Roth IRA. Each the contribution and the conversion have to be reported within the tax software program. For extra data on Backdoor Roth, please learn Backdoor Roth: A Full How-To.

What To Report

You report on the tax return your contribution to a Conventional IRA *for* that yr, and also you report the conversion to Roth *throughout* that yr.

For instance, when you find yourself doing all your tax return for yr 2024, you report the contribution you made *for* 2024, whether or not you really did it in 2024 or between January 1 and April 15, 2025. You additionally report the conversion to Roth *throughout* 2024, whether or not the contribution was made for 2024, 2023, or any earlier years. Due to this fact a contribution made in 2025 for 2024 goes on the tax return for 2024. A conversion carried out throughout 2025 after you made a contribution for 2024 goes on the tax return for 2025.

You do your self an enormous favor and keep away from plenty of confusion by doing all your contribution for the present yr and ending your conversion in the identical yr. I name this a “deliberate” Backdoor Roth or a “clear” Backdoor Roth — you’re doing it intentionally. Don’t wait till the next yr to contribute for the earlier yr.  Contribute for 2025 in 2025 and convert it in 2025. Contribute for 2026 in 2026 and convert it in 2026. This fashion the whole lot is clear and neat.

If you’re already off by one yr, it is determined by whether or not you’re dealing with the contribution half or the conversion half proper now. For those who contributed to a Conventional IRA for 2024 in 2025 or for those who recharacterized a 2024 Roth contribution to Conventional in 2025, please comply with Cut up-Yr Backdoor Roth IRA in FreeTaxUSA, Yr 1. For those who contributed to a Conventional IRA for 2023 in 2024 or for those who recharacterized a 2023 Roth contribution to Conventional in 2024 and transformed in 2024, please comply with Cut up-Yr Backdoor Roth IRA in FreeTaxUSA, Yr 2.

Right here’s the state of affairs we’ll use for example:

You contributed $7,000 to a conventional IRA in 2024 for 2024. Your revenue is just too excessive to assert a deduction for the contribution. By the point you transformed it to Roth IRA, additionally in 2024, the worth grew to $7,200. You don’t have any different conventional, SEP, or SIMPLE IRA after you transformed your conventional IRA to Roth. You didn’t roll over any pre-tax cash from a retirement plan to a conventional IRA after you accomplished the conversion.

In case your state of affairs is totally different, you’ll have to make some changes to the screens proven right here.

Earlier than we begin, suppose that is what FreeTaxUSA reveals:

We’ll examine the outcomes after we enter the Backdoor Roth.

Convert From Conventional IRA to Roth

The tax software program works on revenue gadgets first. We enter the conversion first although the conversion occurred after the contribution.

Once you convert from a Conventional IRA to a Roth IRA, you’ll obtain a 1099-R kind. Full this part provided that you transformed *throughout* 2024. For those who solely transformed in 2025, you gained’t have a 1099-R till subsequent January. Please comply with Cut up-Yr Backdoor Roth IRA in FreeTaxUSA, Yr 1 now and are available again subsequent yr to comply with Cut up-Yr Backdoor Roth IRA in FreeTaxUSA, Yr 2. In case your conversion throughout 2024 was in opposition to a contribution you made for 2023 or a 2023 contribution you recharacterized in 2024, please comply with Cut up-Yr Backdoor Roth IRA in FreeTaxUSA, 2nd Yr.

In our instance, by the point you transformed, the cash within the Conventional IRA had grown from $7,000 to $7,200.

Click on on “Add a 1099-R” when it asks you in regards to the 1099-R.

It’s only a common 1099-R.

Enter the 1099-R precisely as you’ve it. Take note of the code in Field 7 and the checkboxes. It’s regular to have the identical quantity because the taxable quantity in Field 2a, when Field 2b is checked saying “taxable quantity not decided.”  Take note of the distribution code in Field 7. It’s code 2 for those who’re below 59-1/2 and code 7 for those who’re over 59-1/2. The IRA/SEP/SIMPLE field can be checked.

Proper after you enter the 1099-R, you will notice the refund quantity drop. Right here we went from a $1,540 refund to $264. Don’t panic. It’s regular and momentary. The refund quantity will come up after we end the whole lot.

We didn’t inherit this IRA.

It asks you about Roth conversion. Reply Sure to conversion and enter the transformed quantity.

You might be carried out with this 1099-R. Repeat if in case you have one other 1099-R. For those who’re married and each of you probably did a Backdoor Roth, take note of whose 1099-R it’s if you enter the second. You’ll have issues for those who assign each 1099-R’s to the identical individual after they belong to every partner.

Click on on “Proceed” if you’re carried out with all of the 1099-R kinds.

It asks you in regards to the foundation carried over from earlier years. For those who did a clear “deliberate” backdoor Roth yearly, you may reply “No.” Answering “Sure” and getting into all 0’s on the following web page has the identical impact as answering “No.” If in case you have gone backwards and forwards earlier than you discovered this information, a few of your earlier solutions could also be caught. Answering “Sure” right here offers you an opportunity to overview and proper them. If in case you have a foundation carryover on line 14 of Kind 8606 out of your earlier yr’s tax return, reply Sure right here and enter it on the following web page.

The values needs to be all 0 for those who did a “clear” deliberate backdoor Roth. For those who had a small quantity of earnings posted to your Conventional IRA after the conversion and also you didn’t convert the earnings, enter the account’s worth within the second field out of your year-end assertion.

We didn’t take any catastrophe distribution.

Now proceed with all different revenue gadgets till you’re carried out with revenue. Your refund meter remains to be decrease than it needs to be however it’s going to change quickly.

Conventional IRA Contribution

Discover the IRA Contributions part below the “Deductions / Credit” menu.

Reply Sure to the primary query. An extra contribution means contributing greater than you’re allowed to contribute. We didn’t have that.

Enter the quantity you contributed to the Conventional IRA within the first field. Depart the reply to “Did you turn or recharacterize” at No. We transformed. We didn’t recharacterize. We didn’t repay any distribution both.

Your refund quantity goes up once more! It was a refund of $1,540 earlier than we began. It went down so much and now it’s again to $1,496. The $44 distinction is because of paying tax on the $200 earnings earlier than we transformed to Roth.

We didn’t contribute to a SEP, solo 401k, or SIMPLE plan. Reply Sure for those who did.

Withdraw means pulling cash out of a Conventional IRA again to your checking account. Changing to Roth shouldn’t be a withdrawal. Reply ‘No‘ right here.

All values are zero if you did a “clear” deliberate Backdoor Roth. For those who had a small quantity of earnings posted to your Conventional IRA after you transformed and also you didn’t convert the earnings, enter the stability of your Conventional IRA out of your year-end assertion within the second field.

It tells us we don’t get a deduction as a result of our revenue was too excessive. We all know. That’s why we did the Backdoor Roth.

Taxable Earnings from Backdoor Roth

After going by means of all these, let’s verify the way you’re taxed on the Backdoor Roth. Click on on the three dots on the highest proper above the IRA Deduction Abstract after which click on on “Preview Return.”

Search for Line 4 in Kind 1040.

It reveals $7,200 in IRA distributions in line 4a and solely $200 is taxable in line 4b. If you’re married submitting collectively and each of you probably did a backdoor Roth, the numbers right here will present double.

Tah-Dah! You set cash right into a Roth IRA by means of the backdoor if you aren’t eligible to contribute to it straight. You pay tax on a small quantity of earnings for those who waited between contributions and conversion. That’s negligible relative to the good thing about having tax-free development in your contributions for a few years.

Troubleshooting

For those who adopted the steps and you aren’t getting the anticipated outcomes, right here are some things to test.

Conversion Is Taxed

For those who don’t have a retirement plan at work, you’ve the next revenue restrict to take a deduction in your Conventional IRA contribution. FreeTaxUSA offers you the deduction if it sees that you just qualify. It doesn’t provide the alternative of constructing it non-deductible. You see this deduction on Schedule 1, Line 20.

Taking this deduction additionally makes your Roth IRA conversion taxable. The taxable Roth IRA conversion and the deduction on your Conventional IRA contribution offset one another to create a wash. That is regular and it doesn’t trigger any issues if you (or your partner) certainly don’t have a retirement plan at work.

For those who even have a retirement plan at work, the software program didn’t see it. Whether or not you’ve a retirement plan at work is marked by the “Retirement plan” field in Field 13 of your W-2.

Possibly you forgot the test it if you entered the W-2. Double-check the “Retirement plan” field in Field 13 of your (and your partner’s) W-2 entries in FreeTaxUSA to verify they match the W-2.

Self vs Partner

If you’re married, ensure you don’t have the 1099-R and the IRA contribution combined up between your self and your partner. For those who inadvertently assigned two 1099-Rs to 1 individual as a substitute of 1 for you and one on your partner, the second 1099-R won’t match up with a Conventional IRA contribution made by a partner. For those who entered a 1099-R for each your self and your partner however you solely entered one Conventional IRA contribution, you may be taxed on one 1099-R.