This tax year I decided to switch from TurboTax over to HRBlock Online edition, simply because one of my banks offered to cover the cost of the software (approximately $100-$110 for me). In exchange, I believe that I gave them permission to distribute my financial situation to their potential advertisers—this is probably not a great way to give up my privacy for $100, but I think that the AMA (American Medical Association) also distributes my information to insurance companies as well.
I’ve used both the online and CD version of TurboTax in the past, and the interfaces seem relatively similar when filing the backdoor Roth IRA. TheFinanceBuff had a page on using the CD version of HRBlock, but it seems like the online version has a few other not-so-obvious menus. I do thank Harry Sit for providing great concise financial information online throughout the years.
There are two steps in filing a backdoor Roth IRA. (1) Filing a non-deductible Traditional IRA and (2) Filing the 8606 Form for Roth Conversion. Let’s walk through the steps:
- The online version has a top horizontal navigation bar with tabs labeled, “Overview”, “Federal”, “State”…etc. Under each tab are sub-tabs. For instance, under “Federal”, there are tabs for “Personal”, “Income”, “Adjustments & Deductions”. Click on “Adjustments & Deductions”.
- The interface tries to be helpful in suggesting options, but scroll down to the bottom to find the following click boxes and click “Yes”.
- Click “Add” under Retirement and Investments”
- Click “Add Traditional or Roth IRA contributions” You will be adding a non-deductible Traditional IRA.
- Check “We contributed to a Traditional IRA”
- Fill in the amount that you contributed. For 2017, the maximum for those under 50 years old is $5500.
- You have zero dollars in this IRA at the end of the year if you converted all of it to a Roth IRA.
- You did NOT recharacterize the IRA.
- The IRA basis should be zero if you converted everything.
- Again, you didn’t recharacterize.
- Converted everything.
- Now to file the 1099-R form that you received from your custodian to show that you withdrew your non-deductible Traditional IRA and converted it to Roth IRA.
- Add in the 1099-R.
- Select option 2, and continue to fill out according to what the 1099-R shows.
- The funds came from an IRA.
- You converted all of it.
- I selected that I had a basis, but when you convert all of it before any interest accrues, you will not have any basis.
That’s it! Sound out below if you have questions.