Hello! I've misunderstood my wife's Trad IRA -> Roth IRA actions and want to sync up with TT community how I should proceed.
Here is the corrected steps she took during 2022 and 2023:
1. She has contributed a total of $6,000 in 2022
2. She converted $5,004.42 in 2022. The $4.42 are earnings in a money market in trad IRA before converting to Roth IRA
- This leaves $1,000 cost basis in 2022.
- She received a 2022 1099-R of $5004.42 for the conversion
3. She had $1,003 in December 31 2022 has shown in form 5498
- She converted the $1,003 amount in February 2023
When I followed your steps and enter the cost basis and 2022 1099-R form, it did not consider the $4.42 as taxable event. Is this because the conversion to Roth IRA in 2022 ($5,004.42) is less than the contribution made of $6,000?
If the tax is going to be calculated for the following year because of step 3 conversion in Feb 2023, do I just pay the taxable earnings for the year of 2023? How will this add up to the tax year of 2023?
