Hello,
I could use some help entering our 1099-Rs. We exceed the Roth IRA income limits, so we do a Backdoor Roth conversion. My understanding is was that if you exceed income limits, you could fund a Traditional IRA with up to $6500 per person, and then convert to a Roth IRA to circumvent the income limits.
When TurboTax downloaded the 1099-Rs from Fidelity, our tax liability when from a <$200 to almost $2K. I think the $20k+ we converted to Roth IRA it's being taxed as a distribution.
My wife 1099-R shows in box 1 a Gross Distribution of $12,513,47, and it shows the same amount in box 2A (taxable amount). In 2023, my wife funded her IRA with $5500 for the 2022 tax year, and $6500 for the 2023. I don't know where the $513.47 difference is coming from (gains maybe?).
My 1099-R shows in box 1 a Gross Distribution of $7,954.59, and it shows the same amount in box 2A (taxable amount). In 2023, I funded her IRA with $1452.7 for the 2022 tax year, and $6500 for the 2023. I don't know where the $1.89 difference is coming from.
Edit: both 1099-R show Distribution Code 2 in box 7 and box IRA/SEP/Simple is checked. Boxes 2b "taxable amount not determined" and "total distribution" are checked as well.
What are we doing wrong? Thank you in advance!
