In 2021, I surpassed the income limits for Roth IRA contributions and so executed a backdoor contribution. I contributed $6,000 to a traditional IRA on Fidelity, then rolled it over nearly immediately (once the funds landed in the account) to a Roth IRA.
I started doing my taxes this weekend on FreeTaxUSA and I can’t tell if I can’t understand what they’re asking, or if I did something wrong.
The first question is, “Did you make any traditional or Roth IRA contributions during 2021?” The answer there is yes.
Then it asks me to enter any traditional or Roth contributions that I made. I put $6,000 in the traditional box, as a little help box says, “Enter any traditional IRA contribution that was later recharacterized as a Roth IRA contribution as a traditional IRA contribution.”
Then it asks, “Did you recharacterize any IRA contributions?,” to which I answer yes, right?
The next question is “Did you recharacterize any of the $6,000 to a Roth IRA?” Again, the answer is yes.
I enter the dates of my traditional IRA contribution and the date that I rolled it over to the Roth (about a week apart).
Then it says, “Enter the amount of the $6,000 that you recharacterized from a traditional IRA contribution to a Roth IRA contribution (do NOT include any earnings or losses).” The answer is the full $6,000.
Then, “Enter the total amount transferred in your traditional to Roth IRA recharacterization (this includes the amount recharacterized plus any related earnings and less any losses).” The answer here is $6,000.01.
Then I get a warning that says, “You have $5,610 of excess Roth IRA contributions. Excess IRA contributions will cause a tax penalty. You can reduce or eliminate the penalty if you withdraw the excess contributions before timely filing your tax return.”
Is this expected, or did I mess something up? I know there are some peculiar things with traditional IRAs, so just want to make sure I shouldn’t withdraw the excess contributions.
Thanks!
