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uuyournet
Level 1

Alabama tax for Roth IRA Conversion

I'm trying to calulate Alabama tax for Roth IRA conversion using TurboTax Premier before I do the conversion.

 

For Federal tax, I followed the instruction,  "How do I enter a backdoor Roth IRA conversion?" and I'm all good for this.

 

But, for Alabama tax, what I could only find is " Taxable Roth IRA Conversion" in the step, "Some or All of Your Distribution is Taxable" and I found that it went to "5a" as shown below. 

 

 

P1.jpg

 

Can you confirm if it is the right worflow to file Alabama tax for Roth IRA conversion with the option in Vangard below?

 

p2.jpg

 

1 Best answer

Accepted Solutions
ThomasM125
Expert Alumni

Alabama tax for Roth IRA Conversion

The way the backdoor IRA works is you make a contributions to a traditional IRA and then transfer it to a ROTH IRA. If the contribution you made is non-deductible, then the withdrawal of it would not be taxable, and in that case your entry would be correct.

 

You need to be sure that the 1099-R that you receive list "0" in box 2a "Taxable Amount." Otherwise, if you made a deductible contribution to the IRA, you will need to add that in as a deduction and the pension distribution will show as taxable and the two will cancel each other out. If you account for it that way, then you need to enter $7,000 in the Taxable Pension or IRA box on the Alabama return, and your IRA contribution deduction will appear in box Part II, line 1(a) on the Alabama form 40.

 

Hopefully, you made a non-deductible IRA contribution and it is reported as such with "0" listed on form 1099-R as taxable amount, in which case you are all done!

 

 

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1 Reply
ThomasM125
Expert Alumni

Alabama tax for Roth IRA Conversion

The way the backdoor IRA works is you make a contributions to a traditional IRA and then transfer it to a ROTH IRA. If the contribution you made is non-deductible, then the withdrawal of it would not be taxable, and in that case your entry would be correct.

 

You need to be sure that the 1099-R that you receive list "0" in box 2a "Taxable Amount." Otherwise, if you made a deductible contribution to the IRA, you will need to add that in as a deduction and the pension distribution will show as taxable and the two will cancel each other out. If you account for it that way, then you need to enter $7,000 in the Taxable Pension or IRA box on the Alabama return, and your IRA contribution deduction will appear in box Part II, line 1(a) on the Alabama form 40.

 

Hopefully, you made a non-deductible IRA contribution and it is reported as such with "0" listed on form 1099-R as taxable amount, in which case you are all done!

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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