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I don't know all the mechanics but maybe their system hasn't caught up with what you filed as withholding wasn't actually withholding, and instead they are showing direct payments which are classified as estimated taxes.  So until they figure out they don't have the withholding they think you overpaid? - something like that.

 

the issue may be in your return, these payments shouldn't be "withholding" they are estimated taxes.  you should also have a 1099-R for the conversion with the appropriate coding and withholding, if you input the 1099-R into TT using your payments as withholding that's probably where problems began.  you may also then need to file Form 2210 Annualized Income method to line up the income/tax liability timing with the ES payment timing otherwise you could get an underpayment penalty especially if your conversions/payments were later in the year.  by entering it as withholding this issue may have been bypassed as withholding is considered "timely" whenever it happens.

 

doing a Roth conversion with withholding results in the tax being paid out of the IRA distribution not your non-retirement funds so less goes into your Roth, so I think you did it correctly with estimated tax to payment to the IRS.  Tho, if you have this situation again be aware of the estimated tax safe harbor, you only need to pay 100% of last year's tax (110% if AGI > 150k) or 90% of current year's tax whichever is smaller.  If you intend a very large Roth conversion then you may be better off paying ES to make 100/110% of last year's tax, as long as that is paid evenly and quarterly, then you don't need to pay the balance of the tax until final filing.


not a CPA/Expert just my quick thoughts from what you've described.