Conversion of Traditional IRA to Roth IRA, how to enter on MAC Desktop Home & Business

[buriedintaxforms]

Been trying to find a solution for this, but haven't found something that seems to be correct.

I have a Tradition IRA from a 403B roll over from years past that had a basis of $2000. This is all pre-tax dollars.

This year I contributed 6500 in post-tax dollars and then soon over rolled everything over to a Roth IRA. The remaining balance of the Traditional IRA is 0.

My expectation is for this to be reflected on Form 8606 and a taxable amount of $2000 on 1040 Line 4b. Yet, I am unable to make this happen.

I have a single 1099-R from the firm. I first tried to enter in once and then tell turbotax that I did a combination of rolling over and converting. In my mind it should really be that easy. However, I got the warning that TurboTax cannot handle this and requires the 1099-R to be entered twice -- once with the post tax money and once with the pre tax money. I do this, reflecting all the same info on the 1099-R except the amount difference, yet the Form 8606 still doesn't look accurate and there are a bunch of "*" by different entries. There is still not a taxable amount reflected on 1040 Line 4b.

Could someone please walk this process through and explain it to me like I am 5?

Thanks.

[fanfare]

your prior years basis before contribution was $2,000  ?

What was the amount you converted to Roth?
Why do you think the basis of $2,000 is taxable amount after your actions ?

" then tell turbotax that I did a combination of rolling over and converting."

Why?

@buriedintaxforms 

[buriedintaxforms]

As I write this, I now second guess my definitions -- in my understanding

-- IRA Rollover is a non-taxable event. In my case, $6500 contributed in 2023 to a traditional IRA with post-tax dollars being "rolled over" from the traditional to Roth IRA

-- IRA conversion is a taxable event. In my case, $2000 from pre-tax contributions made years prior that existed in the traditional IRA prior to the 2023 contribution that were then transferred from a Traditional IRA to a Roth IRA.

-- Looking up IRA basis is defined as post-tax dollars existing in the IRA. I was using this definition incorrectly, as was thinking in terms of investments as the "cost basis" or really as the existing value of the IRA.

Or is this understanding incorrect?

For your questions:

your prior years basis before contribution was $2,000  ?

-- The basis of the IRA in terms of post-taxed dollars in the account is $0. The value of the tradition IRA from pre-taxed dollars was $2000. To explain more -- in 2019 I had a 403b that I rolled over to a Traditional IRA in 2020 when I left that job. So all money in the traditional IRA before 2033 are pre-taxed contributions. I did nothing with this account until 2023. In 2023, I wanted to backdoor Roth since I am ineligible for pre-tax contributions to a traditional IRA. The value of the traditional IRA as the time of moving to a Roth, not including the post-tax $6500 contribution made in 2023, was $2000.

What was the amount you converted to Roth?

-- In total $8500 was sent from the traditional IRA to the Roth IRA, with a breakdown of $2000 pre-tax that was already in the account and $6500 post-tax contribution that was made in 2023, shortly before the Traditional to Roth move. In summary, $2000 was converted and $6500 was rolled over.

Why do you think the basis of $2,000 is taxable amount after your actions ?

-- So I incorrectly termed the $2000 as a basis if this is considered as post-tax dollars. The basis is in this definition is really $0.

" then tell turbotax that I did a combination of rolling over and converting."

Why?

-- I am considering the $2000 pre-tax as a conversion of Tradition to Roth, and the $6500 post-tax 2023 contribution as a rollover 

[buriedintaxforms]

OK -- I think I finally understand what happened.

The solution is to ignore everything about technicalities of roll-over versus conversion when entering into turbo tax.

Under Deductions & Credits -- Entered 2023 post-tax contributions into Traditional and Roth IRA Contributions. Turbotax appropriately identified that contribution as nondeductible.

Under Personal Income -- Entered a single 1099-R in IRA, 401(k)...., for the traditional to Roth move. When ask what did you do with the money, I said moved to another account then entered the total amount into the "Amount converted to a Roth IRA". Other questions asking about basis and tracking at some point I said "0".

Previewed the forms -- everything was calculated and entered correctly.

Essentially, was just overthinking the whole thing.