Hey group. Long-time TurboTax user. I think I posted here years ago about something, but I don't recall. I'm using TurboTax Deluxe on Windows.
I have a question / comment about how TT 2020 treats inherited IRA distributions (RMD) in 2020 only with back-door Roth IRA contribution (i.e., $7k non-deductible IRA contribution followed by immediate (next day) conversion of $7,000.02 to Roth IRA).
In previous years, TurboTax's calculation on the Form 8606 subform called "Taxable IRA Distribution Worksheet", line 5 ONLY included other Individual IRA distributions, and not (for example, in our case) an older (2013) Inherited, non-spouse IRA. Line 5 is labeled "Enter your distributions from traditional, SEP, and SIMPLE IRAs in 2020.". I don't think it should include an Inherited IRA based on the general guidance that the older inherited IRA is kept separate and isn't allowed to be converted to a Roth IRA. If I override line 5 to zero, the rest of the numbers on the worksheet don't calculate correctly (e.g., various numbers are negative), so that's not really a workable solution.
The actual tax impact is zero... but it changes the numbers on the worksheet and on form 8606 to suggest that some of the back door roth is taxable. Specifically, in my case, say the Inherited IRA RMD was $10k, so line 8 becomes 7000/17000 = .4117, etc.
In the end, the big change in TT2020 seems to be the non-zero value on line 5 which affects the rest of the calculations. I've looked through the IRS documentation that I can find, and there doesn't appear to be a change, although publication 590-B hasn't been updated so it's difficult to tell.
Wondering if anyone else in the community has seen this issue?
