About 4 weeks ago, I posted about errors in the TurboTax NJ worksheet on IRA withdrawals where there was a math calculation error and that the wrong number was used for calculating the taxable portion of an IRA distribution. This error started in tax year 2023 NJ tax returns.
TurboTax must have seen my post because the software math error and IRA value for a taxable distribution was fixed a few weeks ago. But the Roth taxable distribution calculation is still wrong.
In NJ, an IRA distribution that is partially converted to a Roth doesn't matter when it comes to the taxable amount calculation - it all is treated as an IRA distribution even if all of it is converted to a Roth. Either way, you should get the same tax excluded amount.
I used the actual NJ Worksheet C for calculating the taxable amount. That's when I discovered the TurboTax calculation errors starting in tax year 2023 and it wasn't fixed until 2025 for IRA distributions.
For any distribution partially treated as a Roth, TurboTax is counting it all as a Roth. That would be fine IF the tax exclusion calculation where the IRA distribution all counted as a Roth was accurate but it is not. Since TurboTax doesn't provide the calculation details, I can't see where they made the error. All I know is that when using the actual NJ Worksheet C, the taxable amount is not the same as TurboTax taxable amount when a Roth conversion is involved. So, I just manually edited the TurboTax worksheet Column D IRA value to get the TurboTax taxable amount to match the actual number calculated using the NJ worksheet C value.
Hopefully someone at TurboTax will see this and fix the problem.
