Is a contribution to an existing rollover IRA deductible? My investment company calls my account a Rollover and not Traditional or Roth?

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It also seems that my investment company allows $7,000 to be deposited but then counts it as income. My refund due goes to me owing money.

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fanfareAnswer

Level 15

A rollover IRA is, and is treated exactly like, a Traditional IRA.

You can just ignore that terminology.

If you're not getting the deduction, your income may be too high.

If your AGI is $5, you can't make a contribution more than the amount on line 1 of your 1040 to any IRA .

you have an excess contribution, which causes you to owe penalty tax.

you have to remove the contribution

DanaB27

Employee Tax Expert

To clarify, you moved money from a traditional IRA to your Roth IRA?

If yes then this is called a conversion and the amount will be taxable unless you had a basis (nondeductible contributions) in the traditional IRA that was tracked on Form 8606.

Please enter the 1099-R like this:

Login to your TurboTax Account
Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your 1099-R
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”

If you had a basis that was tracked on Form 8606 then answer "yes" to "Any nondeductible Contributions to your IRA?" answer the questions about the basis.

If this does not answer your question then please provide more details. What is the code in box 7? IRA/SEP/SIMPLE box checked? Amounts in box 1 and 2a?

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rwhrangersAuthor

Level 2

No, i have an existing Rollover IRA. It is not traditional or Roth.

My investment account tells me I can contribute up to 7K to it for 2020 tax year. I want to take 7K from savings and contribute that. When i put that 7K in as a contribution on my return, it then goes from $0 due to over $1,000 due. My AGI is $5 since we only have 2 SSA incomes. Does that help?

DanaB27

Employee Tax Expert

If this is not an IRA (traditional or Roth) then do not enter the amount under IRA contributions under the Deduction & Credit section.

For your information, you can only contribute to an IRA if you have taxable compensation (wages, salary, self-employment). You will not be able to contribute to an IRA since you only have Social Security income. Anything that you contribute will be excess contribution.

The total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than:

$6,000 ($7,000 if you're age 50 or older), or
If less, your taxable compensation for the year (IRS)

If you contributed already to the IRA then to avoid the 6% tax on excess contributions, you must withdraw:

the excess contributions from your IRA by the due date of your individual income tax return (including extensions); and
any income earned on the excess contribution.

Request this with your IRA administrator.

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