if I follow your post correctly,
a) there was a $5500 non-deductible IRA contribution and since it was non-deductible, the expectation should be that there is no impact on taxes for this contribution. Do you agree?
b) then you rolled that $5500 plus the prior years' deductible contribution from the Traditional IRA to a Roth. Taxes should have gone UP because of the deductible dollars (zero basis) that were moved to the Roth. There would also have been a 10% penalty on that conversion if you are under 59.5 years old (are you over or under 59 1/2? ),. Do you agree?
c) Did you receive a form 1099-R and input that into TT to reflect the distributions out of the Traditional IRA? Did Box 1 and 2a adequately reflect what the gross distribution was and what the taxable portion was?
d) Form 5498 is NOT to be reported by You. It is a form for the trustee only. See link below and read the very first line of the overview.
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https://turbotax.intuit.com/tax-tips/investments-and-taxes/what-is-irs-form-5498-ira-contributions-i...
<<When I worked through the "Wages & Income" section,I observed that the income tax was imposed on the full distribution/conversion amount, despite there was non-deductible portion included. >>
E) why do you think this is true? What is on Line 1 and 2a of Form 1099?
<<My concern is: when I enter a zero as basis for the year, how could TurboTax let IRS know that there was a non-deductible portion of my distribution/conversion?>>
F) look at Form 1099 - boxes 1 and 2a - that is where TT is picking up what the non-deductible portion is .
does that help any? does it resolve your questions? if no, please restate the remaining concerns.
