After entering my total balance of $5 for Traditional IRA on 12/31/2025, no change to my Federal tax, but my CA tax increased by $345. I am over 50 years old. Why?

[LChohlis]

Under Income -->1099-R section, I entered $5 balance in Traditional IRAs (remaining from non deductible contribution after Roth conversion). It triggered over $300 increase in my CA state tax while Federal tax did not change. I am over 50 which allows to $1000 catch-up contribution. Is TT not recognizing the catch-up for CA state? Or is it something else?

[ReneV4 · Accepted solution]

It appears that you have triggered the Pro-Rata Rule with the remaining balance of $5 in the Traditional IRA, which is not related to the catch-up contribution. A $345 tax increase in CA (where the top brackets are roughly 9%–13%) suggests that TurboTax thinks roughly $3,500 to $4,000 of your previously "tax-free" conversion is now taxable.

• Since your Federal tax didn’t change, the issue is not the $5 balance itself. It is likely a basis discrepancy. Here is how to check:

If you had a large rollover IRA or SEP-IRA from a previous job, the backdoor Roth, that large balance can be the cause, since a portion of your conversion is being taxed based on that total. If this is the case, the tax is technically correct.

• Check your California basis by going to your State return and ensure you have entered your total California basis for 2024. If California thinks you have a zero basis, it will tax the whole conversion.

Ensure your total California basis for 2024 and prior is entered so that the state knows you’ve already paid tax on the money.

• Don’t change the 12/31 balance

Even if you convert the $5 today, your balance on December 31, 2025 does not change. Therefore, ensure you have looked at the basis entries to make any adjustments.

[3/16/26 8:56 a.m.] @LChohlis

[LChohlis]

Thank you! Really appreciate the explanation and the steps to resolve it.