Backdoor Roth Conversion TAXES EXPLAINED

In this video, I'm explaining the Pro Rata Rule and calculating the taxable portion of a backdoor Roth IRA conversion. Go slow, use a calculator and keep records of your calculations with your taxes.
0:00 Intro
0:15 Pro Rata Rule Formula
2:14 Pro Backdoor Roth Conversion Example
3:14 Pro Rata Formula Example
5:11 Important numbers for Pro Rata Formula
5:48 IRS Form 8606
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[@TravisSickle]

Go slow, use a calculator and keep records of your calculations with your taxes.
0:00 Intro
0:15 Pro Rata Rule Formula
2:14 Pro Backdoor Roth Conversion Example
3:14 Pro Rata Formula Example
5:11 Important numbers for Pro Rata Formula
5:48 IRS Form 8606

[@pigletno3]

Hi Travis, thanks for the video. I am doing the simplest backdoor roth conversion. $6k contributed to traditional IRA (has $0 on it beforehand) from my bank account, immediately converted full amount to Roth IRA. Simple question that I don't feel like anyone has a good answer for: when it comes to filing for tax (using Turbo), do I have to pay income tax on the $6K? I assume it should be no since this money came from my bank account (so I already paid income tax for it via my paycheck), but the $ I owed showing on Turbo increased after I completed the Form 8606 steps. Thank you!

[@thomasyang4049]

Hi, I have the same issue. Did you find the answer to your question. I mean, did you finally pay more tax on the backdoor conversion even though you paid income tax?

[@japrtorres]

Just fiund your contents. Very thoughtout! I have a question where in what to do if traditional ira fund incur interests before I am able to convert it. It's probably just a few dollars but how can I proceed correctly in terms of having those interests tax? Can I still convert the whole fund (6.5k + interests)? Thanks

[@TravisSickle]

July 11, 2023

[@aquamondo]

Thank you for this and your other videos.
I did a backdoor conversion from my IRA into my Roth in June.
Can I wait until the end of the year to pay taxes on the conversion or do I need to do it by July 15 as an estimated tax?
Thanks.

[@TravisSickle]

July 7, 2023

[@maksmaks1574]

Hi Travis, In this example, does the Pre-tax IRA and after tax 6K$ are in the same account? if the 6K contributed in different separate account, will this rule or explanation still applies ?

[@RedBarnFinancialTV]

This is great. Can you out the after tax portion into a separate IRA? Otherwise it may get messy over time.

[@TravisSickle]

It’s tracked on irs form 8606.

[@kaypee2101]

Thank you for the informative video. I contributed to 2022 ROTH in January of 2022 and those investments are now in loss. Now I’ve realized that I’m not eligible to contribute to 2022 ROTH due to my income. Instead of selling investments at loss and re characterizing $6k with loss, can I fund ROTH $6k via back door and then re characterize ROTH by withdrawing $6k?

[@TravisSickle]

remove excess then backdoor Roth, however, the backdoor conversion is then taxed for 2023. Can't retroactively convert, only contribute.

[@danielwiedmann2637]

Travis - Thanks for the video. I don't expect your answer to be tax advice and I will check with my accountant before coming to any final conclusions. With that said, I did a backdoor Roth IRA. I deposited 6,000 into a traditional IRA account and the next day converted that to a Roth. I received a 1099R from Vanguard which looks like I owe taxes on the 6,000. That doesn't make sense to me because I already paid taxes on that money when I earned it and there are no capital gains I received. Is that right? Thanks in advance!