Cannot figure out why IRS is interpreting this as inherited. I've always owned. I make my traditional IRA contribution and immediately convert it to a Roth.
This might be a new way for Intuit to intercept filings that might have a calculation error due to a bug in TurboTax.
There is presently a problem with tax returns that include Form 8606 Part 1 and distributions from inherited IRAs that is affecting many TurboTax users. Because the filing itself does not include the details of a Form 1099-R unless the Form 1099-R shows non-zero tax withholding, Intuit's e-filing processor probably can't know if the tax return includes a distribution from an inherited IRA or not and it might be that any tax return that includes Form 8606 Part 1 is getting rejected as a precaution, but I'm just speculating.
@macuser_22 , you might be interested.
@dmertz - I am starting to think that this might be an internal TurboTax reject because of the inherited IRA issue so that taxpayers do not file an improper tax return.
Exact same problem as OP -- non deductible IRA and conversion to Roth. It is NOT an inherited IRA; the "No" box is checked. I filed returns today and they were rejected.
When I checked filing status of the Federal return in TurboTax, I believe the message stated an update was coming Mar 5th. I just logged back on to get a screen shot of the message and it is no longer there and TurboTax leads me through re-filing.
Has anyone tried to re-file yet?
Filed electronically and same thing happened here. I don't have an inherited IRA and only a Traditional IRA.
Sorry, did not complete my answer to you. Started to walk through my tax return per Turbo Tax instructions and received the same message. Have not refiled. Guess will need to wait until March 5th.
I got the same notice Friday Evening and it still had the March 5 Updates posting
@macuser_22 wrote:@dmertz- I am starting to think that this might be an internal TurboTax reject because of the inherited IRA issue so that taxpayers do not file an improper tax return.
Yes, that's what I'm saying too. I suspect it's an internal reject of every tax return that includes Form 8606 because they have no way of knowing if the Form 8606 has been impacted by the inherited-IRA bug or not. This is the first time I've seen mention of a reject that seems to be an internal reject to block filing due to a potential effect from a TurboTax bug, so I thought that it was interesting, particularly with no containment article having been issued.
Thanks for the response.
TurboTax stated in the rejection status, "We are reviewing updates to Taxable Inherited IRA calculations. We expect to have these updates done by March 5th, 2021."
"We expect"... how will we know this problem, apparently grouped together with an inherited IRA calculation problem, is resolved and we can re-file?
Does TurboTax have a limit as to the number of allowed rejections, ie, if we don't know an update has gone in for sure, re-file and the returns are rejected, does it count against a pre-determined maximum?
Thanks for any insights anyone has.
How do we know when the update has gone through? My Mac Desktop version just updated today, 2/27 4pm. Do we know if this update fixed the problem with incorrectly rejecting federal returns due to problems with Taxable Inherited IRA?
This issue has not been resolved by the update that you received today. The fix is projected to available March 5.
Thanks to all who have replied. I am happy to know this is not unique to me (not happy some of you were rejected, but at least I know I wasn't singled out for a reason of which I would have no idea). My hope is this is a TurboTax glitch that will be resolved on March 5, as opposed to the IRS flagging it for some unknown reason. I am certain I reported everything (Nondeductible Traditional IRA contributions converted to Roth) correctly on Form 8606, so a TurboTax issue seems like the only reasonable explanation. Take care, all.
I also received this message today and I also do not have an inherited IRA. I did convert a traditional IRA to a Roth that had both deductible and non-deductible components.
IMO this is definitely a TurboTax problem. If you google it, the only threads that come up are those posted to TurboTax. Seems weird that no one else but us TT users seems to have this problem, no? I've experienced problem after problem filing my taxes with them this year, they obviously do not do any kind of Quality Assurance whatsoever before putting out their products for sale.
Yep, had the same issue as other folks here. Definitely a TurboTax bug.
I think at this point it would've been faster for me to do my taxes by hand, so this is the last year I'll be using TurboTax. Absolutely embarrassing that they ship software of this poor quality. It is not as if 1099's and 8606's are new forms!
Same happened to me.. back door Roth rejected as inherited ira tax issue.. it wasn’t inherited ira was a post tax ira purchase converted to Roth immediately with no gain.. nothing inherited and had both fed and state rejected.. turbo tax CPA told me it has to b software glitch and update is due on March 5th so I guess we will see.. never had this issue in previous years
I have received the same IRS e-file rejection (twice) for a return with a 1099-R for an IRA->ROTH conversion where there was a tax withholding. The 1099-R is correctly entered. The 8606 looks fine. And there's no info entered in the IRA worksheet in Section VI where inherited IRA's are covered. So, theoretically, Intuit is transmitting both the 1099-R and 8606 data for my return. I think their X12/XML team has some debugging to do... Hopefully, Intuit will reply to this thread with a fix date. Can't file either Fed or state until this is solved.
@Jwilly The error you are experiencing is connected with entries on Form 8606. Please see this link to sign up for updates related to this issue: Why Am I Getting a "Check This Entry" Error Related to For 8606?
I am also waiting for the March 5th update to clear up the problem with the rejected federal return because of TT's glitch with the 8606. Would I be able to just print and mail my return after having received a rejection notice from e-filing or would you suggest it would be better to wait and e-file again. Is the return "marked" as rejected at IRS? There is no correction needed in my case - there is no inherited IRA and I answered this question correctly when filing - I think the federal return is ok to mail but didn't want to create more problems for my self if it would be better to wait and e-file again? Would appreciate any thoughts on this.
Just to update this forum..In the Proseries forum, I posted the same issue - here is the latest reply:
hope this helps..Let's see what happens..it's all the same software basically, just different markets..
It appears that today's update (release r20) fixed this bug.
I updated TT this AM. I still get the message that states the fix will be done by March 5th. In other words, after the update today, the error message remains, so I am skeptical that the bug has been fixed. Any thoughts?
The Proseries description states that the problem encountered in that version of the software exists when there is a withdrawal or conversion of an IRA (presumably with a basis) and there is also an inherited IRA. The problem we're encountering in the original thread is that there is no inherited IRA in the first place. It's a phantom inherited IRA. Just want to confirm that the bugs being described and addressed are the same.