My spouse and I do not qualify for tax-deductible IRA contributions due to income limits. Typically I make a contribution and then do a back-door conversion the same year.
I did not do that in 2019 for my spouses contribution, but did it in 2020 converting the entire value of the account. We made a max $6K contribution (not deductible) in both 2019 and 2020, and then converted that account to a ROTH through our brokerage account. The total amount converted was less than the $12K we put in.
That same year, my spouse transitioned to a different job and we converted her small 401K to an IRA in the same account. We received a 1099R for that conversion and have entered that detail.
When we fill in the form, we walk through the steps to indicate that there was a 6K contribution in 2019 and a 6K contribution in 2020 and that we converted the entire amount (again, less than 12K) into a Roth.
When we are asked what the current balance of the Trad IRA at the end of 2020 is, it now has all of the rolled over 401k money in it. If I put that balance in there, turbotax calculates that we have a taxable gain of many thousands of dollars (and our tax burden increases). If we leave that blank, it identifies that the Roth conversion was not taxable.
Did I make a mistake in entering the information into the forms? Did I make a mistake in doing two conversions (a IRA->Roth and a 401k->IRA) in the same year? Or did turbotax make a mistake in calculating the tax burden of the conversion and rollover?
Help!
