Have a 2018 1099R for a 2017 non deductible IRA that was rolled to a Roth in 2018. It is showing as taxable and should not be.

[joeyh]

I think this commonly called a back - door Roth

[itonewbie · Accepted solution]

There is Roth Conversion and there is recharacterization.  Conversion is taxable to the extent the rollover does not represent a return of basis - this is the back-door IRA, at least for individuals who would not otherwise qualify because of their MAGI.  Just about the only times when a conversion is not taxable is (1) the taxpayer has no other IRA, opened a brand new IRA, and rolled over everything (likely immediately) without any gain/loss or (2) the taxpayer rolled over all pre-tax dollars to a 401(k) and converted what's left in the IRA to a Roth.

Recharacterization from a traditional IRA to a Roth is not taxable but the taxpayer would have to be eligible for Roth contribution in the first place.  This is not a back-door IRA.

Based on the above, which one fits your client's fact pattern?

[itonewbie]

Just to clarify, if it is a conversion, the Code doesn't allow the taxpayer to selectively roll over only non-deductible contributions but to include earnings on a prorata basis - not just from one IRA but all if there are multiple accounts (excluding Roth IRAs).