In 2019, I contributed $6676 of after-tax income to my employer 401(k), and from those funds I received an additional $754 as tax-deferred growth. I rolled over the $6676 to my Roth IRA, and the $754 to my Trad IRA. My 401(k) provider issued a 1099-R which showed a gross distribution (box 1) of $7430 with $6676 worth of Roth contributions (box 5). So far so good.
Now onto my IRAs. In 2019, I contributed $5500 to my Trad IRA for the 2018 tax year, and immediately backdoor converted those funds to Roth. I then contributed $6000 to my Trad IRA for the 2019 tax year, and again backdoor converted to Roth. Months later, I received the $754 above in my Trad IRA, and again backdoor converted to Roth. My IRA provider issued a 1099-R which showed $12254 for both box 1 and box 2 (i.e. 5500 + 6000 + 754).
I believe I should only be taxed on $754, because those were tax-deferred dollars that were converted to Roth, and indeed that is what my Form 1040 box 4b shows.
Now onto the issue: when I file my New Jersey state taxes, Turbo Tax is saying that my total New Jersey taxable pensions is $7430.
On an earlier screen, titled "Roth Conversion for <NAME>", I had an option to specify that $11500 of the $12254 distribution was previously taxed by New Jersey (i.e. $12254 - $754 = $11500). When I dug into the New Jersey form "Pensions Wks-TP", it listed the after-tax $6676 I rolled over from my 401(k) as Federal Taxable.
So I believe the $7430 taxable pension comes from the $6676 and $754 amounts, but the error seems to be that the $6676 amount is getting included. The $6676 amount was a post-tax contribution by me, not my employer, to my 401(k) that I subsequently rolled over into my Roth IRA.
I'd appreciate any help on how to correct this.
