nepmeh
New Member

1099-R shows taxable $6,500 convertion of a nondeductible ira to a roth. How to show this is not taxable?

I made a nondeductible Traditional IRA contribution. The next day I converted the entire amount to a Roth IRA.  This conversion should not be taxable, but the 1099-R shows the amount as taxable.  How do I correct this issue?

KenH1
New Member

Retirement tax questions

Enter the 1099-R exactly as printed, which will initially show the entire distribution as taxable.  When you land on the summary screen, select Continue and answer the follow up questions about "what you did with the money" and "contributions previously taxed" (i.e. your non-deductible contributions).  

whitski
New Member

Retirement tax questions

I was having a similar problem. Going to IRS Publication 590-A, I found that as of December 31, 2017 a conversion from an IRA to a Roth is limited when income is above levels revealed in the publication. I will need to undo the conversion before April 15, 2020 or it will be taxable, despite the fact that all my IRA contributions were from post tax income.

vgf
Level 1

Retirement tax questions

From IRS Form 590-A for 2019

 

"Conversions
You can convert a traditional IRA to a Roth IRA. The conversion is treated as a rollover, regardless of the conversion method used. Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another, apply to these rollovers. However, the 1-year waiting period doesn’t apply.
Conversion methods. You can convert amounts from a traditional IRA to a Roth IRA in any of the following three ways.
• Rollover. You can receive a distribution from a traditional IRA and roll it over (contribute it) to a Roth IRA
within 60 days after the distribution.
• Trustee-to-trustee transfer. You can direct the
trustee of the traditional IRA to transfer an amount
from the traditional IRA to the trustee of the Roth IRA.
• Same trustee transfer. If the trustee of the traditional
IRA also maintains the Roth IRA, you can direct the
trustee to transfer an amount from the traditional IRA
to the Roth IRA."

 

 

Retirement tax questions

I am facing this same issue, however I don't see the 'contributions previously taxed' option. Does anyone know if the options have changed?

SamS1
Expert Alumni

Retirement tax questions

Follow this process.  It should result in your traditional distribution being non-taxable if you converted to a Roth.  Click here for more information.

 

The pandemic has affected your taxes in many ways. Including reporting in TurboTax the amount of stimulus money you received. Click Here for more information on how the Pandemic affected your 2020  taxes.