How to Report 2023 Backdoor Roth in H&R Block Tax Software

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How to Report 2023 Backdoor Roth in H&R Block Tax Software

Updated on January 28, 2024, with updated screenshots from H&R Block software for 2023 tax filing. If you use other tax software, see:

How To Report Backdoor Roth In TurboTax How to Report Backdoor Roth In FreeTaxUSA

If you did a Backdoor Roth, which involves making a non-deductible contribution to a Traditional IRA and then converting from the Traditional IRA to a Roth IRA, you need to report both the contribution and the conversion in the tax software. For more information on Backdoor Roth, please read Backdoor Roth: A Complete How-To and Make Backdoor Roth Easy On Your Tax Return.

Table of ContentsWhat To Report Use H&R Block Download Software Convert Traditional IRA to Roth Enter 1099-R Converted to Roth Additional Questions Non-Deductible Contribution to Traditional IRA IRA Contribution Conversion Isn’t Recharacterization Basis From Previous Year Pro-Rata Rule Taxable Income from Backdoor Roth Troubleshooting Fresh Start Covered by Retirement Plan Self vs SpouseWhat To Report

You report on the tax return your contribution to a traditional IRA *for* that year, and you report your conversion to Roth *during* that year.

For example, when you are doing your tax return for year X, you report the contribution you made *for* year X, whether you actually did it in year X or in the following year between January 1 and April 15. You also report your converting to Roth *during* year X, whether the money was contributed for year X, the year before, or any previous years.

Therefore a contribution made during the following year for year X goes on the tax return for year X. A conversion done during year Y after you made a contribution for year X goes on the tax return for year Y.

You do yourself a big favor and avoid a lot of confusion by doing your contribution for the current year and finishing your conversion during the same year. I called this a “planned” Backdoor Roth — you’re doing it deliberately.

Don’t wait until the following year to contribute for the previous year. Contribute for year X in year X and convert it during year X. Contribute for year Y in year Y and convert it during year Y. This way everything is clean and neat.

If you are already off by one year, catch up. Contribute for both the previous year and the current year, then convert the sum during the same year. See Make Backdoor Roth Easy On Your Tax Return.

Use H&R Block Download Software

The screenshots below are taken from H&R Block Deluxe downloaded software. The downloaded software is way better than online software. If you haven’t paid for your H&R Block Online filing yet, consider buying H&R Block download software from Amazon, Walmart, Newegg, and many other places. If you’re already too far in entering your data into H&R Block Online, make this your last year of using H&R Block Online. Switch over to H&R Block download software next year.

Here’s the scenario we’ll use as an example:

You contributed $6,500 to a traditional IRA in 2023 for 2023. Your income is too high to claim a deduction for the contribution. By the time you converted it to Roth IRA, also in 2023, the value grew to $6,700. You have no other traditional, SEP, or SIMPLE IRA after you converted your traditional IRA to Roth. You did not roll over any pre-tax money from a retirement plan to a traditional IRA after you completed the conversion.

If your scenario is different, you’ll have to make some adjustments to the screens shown here.

Before we start, suppose this is what H&R Block software shows:

We will compare the results after we enter the Backdoor Roth.

Convert Traditional IRA to Roth

Income comes before deductions on the tax form. Tax software is also organized this way. Even though you contributed before you converted, the software makes you enter the income first.

Enter 1099-R

When you convert the Traditional IRA to Roth, you receive a 1099-R for that year. Complete this section only if you converted *during* the year for which you are doing the tax return. If you only contributed for the year in question but didn’t convert until the following year, skip all the way to the next section Non-Deductible Contribution to Traditional IRA.

In this example, we assume by the time you converted, the money in the Traditional IRA had grown from $6,500 to $6,700.

Click on Federal -> Income. Scroll down and find IRA and Pension Income (Form 1099-R). Click on “Go To.”

Click on Import 1099-R if you’d like. I show manual entries with “Enter Manually” here.

Just a regular 1099-R.

If you imported your 1099-R, double-check to make sure the import exactly matches the copy you received. If you enter your 1099-R manually, be sure to enter everything on the form exactly. Box 1 shows the amount converted to the Roth IRA. It’s normal to have the same amount as the taxable amount in Box 2a when Box 2b is checked saying “taxable amount not determined.” Pay attention to the distribution code in Box 7. My 1099-R has code 2.

My 1099-R had the IRA/SEP/SIMPLE box checked.

Did not inherit.

Converted to Roth

This is a very important question. Read carefully. Answer No, because you converted, not rolled over.

Now answer Yes, you converted.

We converted all of it in our example.

Answer Yes because you made a nondeductible contribution to a traditional IRA.

The refund in progress drops a lot at this point. We went from a $2,434 refund to $946. Don’t panic. It’s normal and only temporary. It will come back up after we complete the section for IRA contributions.

You are done with one 1099-R. Repeat the above if you have another 1099-R. If you’re married and both of you did a Backdoor Roth, pay attention to whose 1099-R it is when you enter the second one. You’ll have problems if you assign both 1099-R’s to the same person when they belong to each spouse. Click on Finished when you are done with all the 1099-Rs.

Additional Questions

A few more questions.

Answer Yes because you contributed to a Traditional IRA for the year.

We will wait.

Non-Deductible Contribution to Traditional IRA

Now we enter the non-deductible contribution to the Traditional IRA *for* the year in question. Complete this part whether you contributed in the same year or you did it or are planning to do it in the following year between January 1 and April 15.

If your contribution during the year in question was for the previous year, make sure you entered it on your previous tax return. If not, fix your previous return first.

IRA Contribution

Click on Federal -> Adjustments. Find IRA Contributions. Click on “Go To.”

Wrong tense but answer “Yes” because you contributed to an IRA for the year in question.

Check the box for Traditional IRA if you contributed directly to a Traditional IRA. If you originally contributed to a Roth IRA and then you recharacterized the contributions as traditional contributions, check the Roth IRA boxes here and then answer yes when it asks you whether you recharacterized.

You know you don’t get a deduction due to income. Enter anyway.

Enter your contribution amount. We contributed $6,500 in our example.

Conversion Isn’t Recharacterization

This is important. Answer No because you didn’t recharacterize. You converted to Roth.

We don’t have any excess contribution.

Basis From Previous Year

If you did a clean “planned” backdoor Roth and you started fresh each year, enter zero. If you contributed non-deductible for previous years (regardless of when), enter the number on line 14 of your Form 8606 from last year.

Pro-Rata Rule

This is another important question. If you are doing it the easy way as in our example, technically you can answer Yes and skip some questions. The safer bet is to answer No and go through the follow-up questions. If you’ve been going through these screens back and forth, you may have put in some incorrect answers in a previous round. You will have a chance to review and correct those answers only if you answer No.

In a clean planned backdoor Roth, you contribute for year X during year X. Leave the boxes blank. If you didn’t know better and you contributed for the previous year after January 1, enter the amount in the first box. If you already did it the hard way for the previous year, please, please, please do yourself a big favor and do it the easy way this year. See Make Backdoor Roth Easy On Your Tax Return.

The box should be blank when you do a clean planned backdoor Roth. If you have other Traditional, SEP, or SIMPLE IRAs, add up the balances from your year-end statements and put the value here. The software will apply the pro-rata rule.

That’s great. We’re expecting it.

A summary of your contributions. 0 in Traditional IRA deduction means it’s nondeductible. Click on Next. Repeat for your spouse if both of you did a Backdoor Roth.

We are done entering the non-deductible contribution to the Traditional IRA. Now the refund in progress should go back up. It was a refund of $2,434 when we first started. Now it’s a refund of $2,396. The difference of $38 is due to the tax on the extra $200 earned before the Roth conversion.

If you only contributed *for* last year but you didn’t convert until the following year, remember to come back next year to finish the conversion part.

Taxable Income from Backdoor Roth

After going through all these, let’s confirm how you’re taxed on the Backdoor Roth.

Click on Forms on the top and open Form 1040 and Schedules 1-3. Click on Hide Mini WS. Scroll down to lines 4a and 4b.

It shows $6,700 in IRA distributions, $201 of which is taxable. The taxable income came out to $201, not $200, due to some rounding in the calculation. If you are married filing jointly and both of you did a backdoor Roth, the numbers here will show double.

Tah-Dah! You put money into a Roth IRA through the backdoor when you aren’t eligible to contribute to it directly. You will pay tax on a small amount in earnings if you waited between contributions and conversion. That’s negligible relative to the benefit of having tax-free growth on your contributions for many years.

Troubleshooting

If you followed the steps and you are not getting the expected results, here are a few things to check.

Fresh Start

It’s best to follow the steps fresh in one pass. If you already went back and forth with different answers before you found this guide, some of your previous answers may be stuck somewhere you no longer see. You can delete them and start over.

Click on Forms and delete IRA Contributions Worksheet, 1099-R Worksheet, and Form 8606. Then start over by following the steps here.

Covered by Retirement Plan

Make sure the “Retirement plan” box in Box 13 of the W-2 you entered into the software matches your actual W-2. If you are married and both of you have a W-2, make sure your entries for both W-2’s match the actual forms you received.

When you are not covered by a retirement plan at work, such as a 401k or 403b plan, your Traditional IRA contribution may be deductible, which also makes your Roth conversion taxable.

Self vs Spouse

If you are married, make sure you don’t have the 1099-R and the IRA contribution mixed up between yourself and your spouse. If you inadvertently assigned two 1099-Rs to one person instead of one for you and one for your spouse, the second 1099-R will not match up with a Traditional IRA contribution made by a spouse. If you entered a 1099-R for both yourself and your spouse but you only entered one Traditional IRA contribution, you will be taxed on one 1099-R.

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