back door Roth IRA state distribution

[zymxhjjtm197227]

Hi I did back door Roth in 2022. In my 1099R box 16 state distribution is 0. however in TT there is a page asking " where is this distribution come from" and it entered the distribution amount automatically and I cannot change it to 0.  In my state part, there is no entries show this distribution is Back door roth conversion.  I am in NC. does this mean this distribution is taxable in NC? thanks

[LindaS5247]

No, this does not necessarily mean the distribution is taxable in North Carolina.

If your Form 1099-R is coded properly and entered as shown, this should flow through correctly to your North Carolina return, and TurboTax will properly calculate your tax/refund.

You should have received a Form 1099-R with a Code 2 in Box 7, or Code 7 if your age is over 59 1/2.

Your Form 1099-R should be entered into TurboTax exactly as shown.  Check your Form 1099-R entries for any input errors.

Click here for detailed instructions on properly entering your form 1099-R for your backdoor Roth in TurboTax.

Depending on which TurboTax version you are using, the following are the steps to enter your backdoor IRA conversion:

For TurboTax Online:

Step 1:  Enter the Non-Deductible Contribution to a Traditional IRA

1. Sign in to your TurboTax account
2. Open your return if it’s not already open
3. Select Federal from the menu, then Deductions & Credits
4. Locate the Retirement and Investments section and select Show more
5. Select Start or Revisit next to Traditional and Roth IRA Contributions
6. Check the Traditional IRA box and select Continue
7. Answer No to the question, Is This a Repayment of a Retirement Distribution?
8. On the screen, Tell Us How Much You Contributed, enter the amount contributed and select Continue
9. Answer No on the screen Did You Change Your Mind?, then answer the questions on the following screens
10. When you reach the Choose Not to Deduct IRA Contributions screen, select Yes, make part of my IRA contribution nondeductible, enter the amount you contributed, then select Continue. If none of your contribution can be deducted, you will not see the option to make part of it nondeductible. Instead, the full amount of your contribution will automatically be nondeductible

Next:

1. Select Continue on Your IRA Deduction Summary

Step 2:  Enter the Conversion from a Traditional IRA to a Roth IRA

1. Select Wages & Income
2. Locate the Retirement Plans and Social Security section and select Show more, then select Start or Revisit next to IRA, 401(k), Pension Plan Withdrawals (1099-R)
3. Answer Yes to Did you get a 1099-R in 2022?, then Continue
   • If you land on the screen, Your 1099-R Entries, select Add Another 1099-R
4. Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions
5. Answer the questions on the following screens, until you reach Tell us if you moved the money through a rollover or conversion
6. Select I converted some or all of it to a Roth IRA and Continue

1. Next, choose Yes, all of this money was converted to a Roth IRA
2. Continue answering questions until you come to the screen, Your 1099-R Entries

To check the results of your backdoor Roth IRA conversion, see your Form 1040:

1. From the menu, select Tax Tools, then Tools (If you're currently using the TurboTax Mobile app, you'll need to sign in to the web browser version)

1. Under Tools Center, select View Tax Summary
2. From the side menu, select Preview my 1040

• Your backdoor Roth IRA amount should be listed on Form 1040, Line 4a  as IRA distributions

• Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to Roth IRA, in which case the earnings would be taxable
• Schedule 1, Line 20, IRA deduction should be blank

1. Select Back to return to where you left off in TurboTax

If you are using TurboTax CD/download: 

Step 1: Enter the Non-Deductible Contribution to a Traditional IRA

1. Sign in to your TurboTax account
2. Open or continue to your return if it’s not already open
3. Select the Federal Taxes tab (this is Personal Info in TurboTax Home & Business), then Deductions & Credits
4. Select I'll choose what I work on
   • On the list of sections, locate Retirement & Investments
   • Then select Start or Update next to Traditional & Roth IRA Contributions
5. Check the box for Traditional IRA and Continue
6. Answer Yes to Did you contribute to a traditional IRA?
7. Answer No to Is This a Repayment of a Retirement Distribution?
8. On the Tell Us How Much You Contributed screen, enter the amount contributed and Continue
9. Answer No on the screen Did You Change Your Mind?, then answer the questions on the following screens
10. When you reach the Choose Not to Deduct IRA Contributions screen, select Yes, make part of my IRA contribution nondeductible, enter the amount you contributed, then select Continue. If none of your contribution can be deducted, you will not see the option to make part of it nondeductible. Instead, the full amount of your contribution will automatically be nondeductible

Step 2: Enter the Conversion from a Traditional IRA to a Roth IRA

1. Select Wages & Income, then I'll choose what I work on
2. In the list of sections, locate Retirement Plans and Social Security, then select Start or Update next to IRA, 401(k), Pension Plan Withdrawals (1099-R)
3. Answer Yes to Did you have any of these types of income in 2022? and Continue
   • If you land on the Your 1099-R Entries screen instead, select Add Another 1099-R
4. Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions
5. Answer No to Did You Inherit This IRA?
6. Answer None of this distribution was transferred to charity
7. Select I moved the money to another retirement account (or returned it to the same retirement account) on the What Did You Do With The Money From This Payer? screen
8. Select I did a combination of rolling over, converting, or cashing out the money. Then, enter the full amount in the box next to Amount converted to a Roth IRA account and Continue

1. Continue answering questions until you come to the screen Your 1099-R Entries

To check the results of your backdoor Roth IRA conversion, see your Form 1040:

1. Select Forms from the menu

1. Select Form 1040 from the menu
2. Use the scroll bar to find:
   • Line 4a IRA Distributions. Your backdoor Roth IRA amount should be listed
   • Line 4b Taxable amount should be zero, unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to a Roth IRA

1. Select Schedule 1 from the menu
2. Line 20 IRA deduction should be blank

1. To return to where you left off in TurboTax, select Step-by-Step from the menu at the top of the screen

Note: If your conversion includes contributions made in 2022 for 2021, you'll need to check your 2021 return to make sure it includes Form 8606, Nondeductible IRAs. If this form isn't included in your 2021 return, you'll need to fill out a 2021 Form 8606 to record your nondeductible basis for conversion, and mail this form to your designated IRS office. Don’t amend your 2021 return to record your basis. (Note: If you are required to file Form 8606 to report a nondeductible contribution to a traditional IRA, but don’t do so, you’ll be subject to a $50 penalty. This penalty can be waived if you can show reasonable cause.)

To view your State Return in TurboTax:

• Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
• With the Tax Tools menu open, you can then:
• Select Print Center and then Print, Save, or Preview This Year's Return to preview your entire return, including all forms and worksheets (you may be asked to register or pay first).
• View only your 1040 form by selecting Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu.

Please click here for a  TurboTax Help link to watch a video to help walk you through the steps. 

Click here to contact Turbo Tax for assistance.