Trad IRA (with only after tax contributions) conversiion to Roth IRA - Isn't the basis tax free??

Forum|Forum|5 years ago
February 24, 2021
3 replies
33 views

I have only after tax money in my Trad IRA, and converted that to my ROTH IRA. The 1099-R 2a shows all the money as taxable. The Form 8606 shows the correct taxable amount, but the 1040, not so much - what's going on here???

DanaB27

Employee Tax Expert

Yes, the amount allocated to the basis will be tax-free. Please make sure you enter your basis when TurboTax asks.

Please enter your 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”
On the "Your 1099-R Entries" screen click "continue"
Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
Answer the questions about the basis

You can verify your entry on line 4 of Form 1040.

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Chas56Author

Level 2

This response sounds great, but I'm not getting the prompts you mention. I don't get the prompt that asks be how much was after tax money. I have gone into the 1099-R, under the section "Additional Distribution Information, section Rollovers, ROTH Conversions and Recharacterizations, I went to the section re: rollover & conversion - B4 thru B8 and showed that all the Trad IRA was converted (B4 &5) and how much was previously taxed (B8).

And then the original number remained on my 1040. The Non-taxable amount (the Trad Basis) was $36,809, but 1040, 4b shows $16,430 (I can't change that number and have no idea where it came from).

Now what?

DanaB27

Employee Tax Expert

Please follow these steps to get to the questions:

Please make sure that you click "continue" after you entered all 1099-Rs and are back on the "Your 1099-R entries" screen.
The next question will be about Disaster Distributions,
Then the "Any nondeductible Contributions to your IRA?" screen comes up.
On the "Let's find your IRA basis" screen you will enter your basis and continue.
On the "Tell us the value of your traditional IRA" screen you will enter the value of all traditional IRA, SEP and SIMPLE IRA accounts on December 31,2020.

Please be aware if you had any value left in your IRA accounts then some of the basis will be allocated to that amount. Each distribution has a part of the basis allocated, it isn't like a distribution from the Roth where first the basis is distributed and then the earnings.

If this does not help then please tell me what code you have in box 7.

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