DanaB27
Expert Alumni

Retirement tax questions

If you made previous deductible contributions in your traditional IRA then part of each distribution/conversion will be taxable. If you do not take the full amount out (balance is $0) then the basis (nondeductible contribution) is allocated between the conversion and the remaining balance left in the traditional IRA. Therefore changing the remaining balance will affect how much of the conversion is taxable. I would recommend looking at Form 8606 part I to see how the taxable and nontaxable parts are calculated (like dmertz mentioned).

 

To verify you made the $6,000 contributed in 2022 to the traditional IRA nondeductible (you won't get an IRA Deduction on line 20 of Schedule 1)?  Did you have nondeductible contributions to the traditional IRA from previous years (reported on Form 8606)? Please be aware that the question  "Any nondeductible Contribution to your IRA?" is referring to nondeductible contributions from prior years, not from 2022

 

 

Please see the instructions below on how to report nondeductible traditional IRA contributions and conversion for additional information.

 

To enter the nondeductible contribution to the traditional IRA:

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions” 
  3. Click on “Jump to IRA contributions"
  4. Select “traditional IRA
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution?
  6. Enter the amount you contributed
  7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
  8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
  9. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
  10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

 

To enter the 1099-R conversion: 

 

  1. Click on "Search" on the top right and type “1099-R”  
  2. Click on “Jump to 1099-R”
  3. Click "Continue" and enter the information from your 1099-R
  4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA
  5. On the "Review your 1099-R info" screen click "continue"
  6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
  7. Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

 

@tmnhall81

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