[Joel]

I do them myself. Always have. Only consulted with a CPA once. He gave me an hour for free and I had a question about how to handle a legal settlement I didn’t know the answer to.

Backdoor Roth IRAs are relatively simple. Is he filing Form 8606? Form 8606, Part I reports the cost basis in your Traditional IRA(s), including any new nondeductible contributions. Form 8606, Part II performs the Pro-Rata Rule calculation to determine how much of the conversion was taxable and how much was not.

For you to owe a 6% penalty you would have to have made an excess contribution to a Traditional or Roth IRA. Since there is no income limit on nondeductible Traditional IRA contributions, I’m not sure how it’s coming up with the 6% penalty. All I can think of is that he’s thinking you made a disallowed Roth IRA contribution. But I thought the penalty on the excess contribution was paid in the following tax year in that scenario. That’s because you have until the tax filing deadline to take a corrective distribution of the excess contribution.

[Lita]

I did backdoor Roth for a few yrs and didn’t pay 6% tax… he’s doing something wrong or not understanding it.

[Kristina]

I’ve prepared them myself (usually with the aid of a tax program) all my life. Now it’s TurboTax, as a couple decades ago they bought out and eliminated the one truly excellent program that essentially explained the tax code to you as you entered your data.

No one cares more about your money than you do, and I found as I go through the process of preparing the taxes sometimes I remembers other receipts that might help reduce the taxes.

Also, I learn about potential deductions and credits that I might want to manage my finances to to take in future years.

[Author]

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