Disappointed in the incomplete responses given by TurboTax. Sloppy handing of special situations is a continuing frustration for this 20-year TT user.
Daughter received a 1099-Q for 2024 that includes amounts rolled into her Roth IRA after January 1, 2024 for tax years 2023 and 2024. About half of the total distribution is Earnings and the other half is Basis.
I reviewed a question on this topic and a response stating that the 1099-Q should not be entered on the Federal return because it is not taxable. That seems sketchy. TurboTax asks "Did you receive a 1099-Q?" It seems odd to say no. TT could at least record the particulars of the 1099-Q and then ask about the special situation of a qualified rollover. Then the transaction would be tracked properly, even if not included in the Federal filings.
For California, the checkbox brings up a dialog that asks about 529 rollovers to Roth. It does not specify whether the amount entered should be the Gross Distribution or the Earnings. I chose to enter Earnings, to avoid being taxed on the Basis. The proper way for TurboTax to address this would be to record the Gross Distribution, Earnings and Basis separately in the application. Then TT should enter the proper amount in the California tax form.
Please clarify. Thanks.
