Retirement tax questions
The taxable amount of your traditional IRA to Roth IRA conversion should appear on AL Form 40, Part 1, line 5a. A possible explanation why you are not seeing the taxable Roth IRA conversion on your AL Form 40 could be because the type of distribution, as recorded on your 1099-R, may not be accurate or perhaps such information was not entered.
It does appear that you received a Form 1099-R, from your financial institution reporting the Roth conversion. It will be coded as a rollover to a Roth IRA. You'll use the information from that form to report your Roth conversion income on Form 8606 with the taxable portion of the conversion income reported on your Form 1040 as well as AL Form 40.
The starting point in your analysis should be with your federal return. In our test return, we entered a $5,000 IRA to Roth conversion and the distribution was reflected as a Code G, direct rollover and rollover contribution. What does your 1099-R reflect in Box 7? You should enter the Box 7 information as it appears on your 1099-R; however, if it reflects something other than a rollover to a Roth IRA, perhaps you should see if you can get a corrected 1099-R from the entity that issued the 1099-R.
In our test return, we also saw the following screen, in the federal section, which asked about whether we had rolled the funds into a Roth IRA. We responded to that question with a "yes." Did you see this screen or a similar screen? Upon checking our AL test return, we did see that the $5,000 IRA to Roth IRA conversion was taxable and appeared, as noted above, in Part I, line 5a of AL Form 40.
Lastly, you should receive Form 5498 from the financial institution that received the Roth IRA funds. This form reports the value of the funds received and the value of the account at the end of the year. This form is generally for information purposes only. The data doesn't have to appear anywhere on your tax return. Form 5468 is usually mailed out by May 31st.
