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The 1099-Q is the only reporting that needs to be done for a qualified QTP to Roth transfer.  That gets submitted to the IRS by the financial institution handling the QTP as well as a 5498 from the institution handling the Roth.     You should only report the transfer on your tax return if it exceeds the $35,000 limit placed on it at which point it becomes taxable.  Which is why the TurboTax system is trying to make it taxable.  Just delete any entries related to it.   Here is some more information on QTPs and the QTP to Roth transfers.

Since you've already sent the file for review, you likely won't hear back for days. You can fix this manually by forcing the software to ignore the "extra" bucket:   Revisit Alabama State Interview:   Go to the State Taxes tab and select Alabama.  Navigate to the Income section and find Retirement and Pension Distributions. Click Update or Revisit. The "Some or All of Your Distribution is Taxable" Screen: You will likely see a list of your 1099-Rs. Click Edit next to the conversion 1099-R. You will see a field for "Taxable Roth IRA Conversion." * The Fix: If the number there is already filled in, try changing it to $0. Why? Alabama already pulls the taxable amount from the Federal 1099-R data you entered. By entering $0 here, you stop the "State-only" interview from adding a second layer of tax to the same transaction. Check Schedule RS Part 2 Again:   Go to Forms Mode (top right) and open Schedule RS. Check if Column I now correctly matches the Gross Conversion amount. 3. Alternative Fix: The "Manual Column I" Correction If the "Zero" trick doesn't work, the bug is "hard-coded" into the worksheet. In Forms Mode, open the Retirement Income Worksheet (or the Schedule RS Part II Worksheet). Look for the line calculating the Alabama taxable amount. Override the field: Right-click (or Command-click) on the incorrect Column I amount and select Override. Enter the correct Gross Distribution amount from your 1099-R. Overrides can sometimes block e-filing, but for this specific state bug, it's often the only way to get a correct Alabama Form 40.

@user17701419133 I completely understand that. I mentioned that they are not available for import electronically until later in the month. So people like me, who like to do that, can't finish their returns anyway until later. I also understand why people start their taxes early, and I am not trying to defend the company. I am only saying that a few days later isn't a big problem, and I will be concerned if it goes on too long. 

The deduction is automatic on your state return as long as you select the correct source of your distribution. After the 1099-R input, there are several screens that you must go through in order to get the full deduction for New York State.    Please follow the steps below: Go to your 1099-R and edit your entry. Continue past the screens until you reach the screen, Where is your distribution from? Choose retirement distributions from the US Government. Click Continue. Answer the questions on following screens. Go to your New York return. Continue past the screens until you reach, Your New York Income Adjustments. On this page, you will see the full amount of your taxable 1099-R deducted.  @user17698982497   

In accounting theory, you are correct: A return of capital is simply getting your own money back, which shouldn't feel like a taxable "event." However, the IRS views an S Corp officer as an employee first and an investor second.   The "reasonable wage" concept is triggered not by the accounting character of the money (profit vs. return of capital), but by the act of making a distribution to a shareholder-employee who provides "substantial services."

Your 1098-T does not claim that you are able to be a dependent on someone else's tax returns.  Back in the personal info section, you apparently checked the box saying you can be claimed as a dependent. Go back and change that answer. 

if that were true a lot of brokerages are breaking the law!  1099B and consolidated 1099s are due by mid February not 1/31 which will be a big hold up for a lot of people.   I'm not doing anything til end Feb, all this forms noise and issues should be stable by then - it's been clear since the initial release last year that this tax season would require some patience.

Tried all this and same problem, 2 hours with Tech support and they are suggesting a refund as the best solution. So people, if it doesn't work, it won't ever work and you should simply request a refund.