How To Enter 2023 Mega Backdoor Roth in TurboTax Updated

Conversion Is Taxed

Recharacterized Contribution

1. That could kick you into a higher tax bracket that year; however, you may not have to pay tax on all the money; a pro-rata rule applies to prevent taxing the amounts attributable to after-tax contributions.
2. Earnings on the Roth contributions are tax-free.
3. Aside from getting around the limits, why would taxpayers want to take the extra steps involved in doing the backdoor Roth IRA dance?
4. When you eventually sell the assets, you also pay taxes on the capital gains.
5. If Vanguard (or whoever) didn’t check that box, then they had better have left box 2a blank or put a $0 in it.

Contributed to Traditional IRA