I transferred $5,500 to Traditional IRA from my bank account, and then converted to Roth IRA. However, it was counted as taxable distribution at Turbotax. Could you help?

 

Retirement tax questions

Did you enter the IRA contribution?   I assume you want it to be a after-tax non-deductible contribution so indicate that in the interview if it asks.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Coleen3
Intuit Alumni

Retirement tax questions

If there is no Code G on your 1099-R for your IRA, you need to tell the program that you rolled the money over in a timely manner (60 days).

(See the attached screenshot below. Click to enlarge.)

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Retirement tax questions

Thanks for the comments. I followed your screenshot, and entered $5,500 was converted to Roth IRA. However, the $5,500 still shows as taxable distribution. As you know, the $5,500 is after tax money since it's from my bank account, and therefore is shouldn't be taxed again when I did the conversation. Anything else I can try?

Retirement tax questions

In addition to the 1099-R you must enter the non-deductible contribution as I said in a comment above.  That will produce a 8606 form to offset the tax as long as you did not have any other Traditional IRA open at the end of 2017- then the tax will be prorated.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

Retirement tax questions

Great. That works for the $5,500 I contributated for 2017. Thanks.
However, besides the one above, I also transferred $5,500 to Traditional IRA for 2016 from my bank account on 3/1/2017, and then immeidatedly converted to Roth IRA. Somehow I forgot to enter this into Turbotax when I filed 2016 tax return last year. Is there anything I can do to put that $5,500 for 2016 as non-taxable?

Retirement tax questions

If you failed to report a 2016 IRA contribution on yiur 2016 tax return then you mist amended 2016 to either take a deduction or create a 2016 8606 form attached to the amended return.  If there is no other reason to amend other then to file the missing 8606 for a non-deductible Traditional IRA contribution you can file a stand-alone 8606 with the non-deductible contribution on line 1, any other prior years non-deductible basis on line 2, the total of  1&2 on line 3 and 14, and mail that to the IRS.   Be sure to use a 2016 8606 form.

For 2017 you would enter this as the prior year non-deductible contribution in the interview when it asked if you tracked your non-deductible contributions.

<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f8606_16.pdf">https://www.irs.gov/pub/irs-pdf/f8606_16.pdf</a>
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i8606_16.pdf">https://www.irs.gov/pub/irs-pdf/i8606_16.pdf</a>
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

Retirement tax questions

"As you know, the $5,500 is after tax money since it's from my band account" Please elaborate.

Retirement tax questions

Thank you very much. I put $5,500 for 2017 at line 1 and $5,500 for 2016 at line 2. Now I'm able to put both $5,500 for 2016 and 2017 non-taxable. Will fine a stand-along 2016 8606 form for the nondeductible $5,500 for 2016.

Retirement tax questions

Thank you very much. I put $5,500 for 2017 at line 1 and $5,500 for 2016 at line 2. Now I'm able to put both $5,500 for 2016 and 2017 non-taxable. Will fine a stand-along 2016 8606 form for the nondeductible $5,500 for 2016.

Retirement tax questions

That should be "from my bank account" instead of "from my band account." Sorry for the typo.