Federal return rejected for potential issue with "Taxable inherited IRA". I have a nondeductible Traditional (not inherited) and make backdoor Roth contributions. Help?

[NCC2]

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.

[kevinventullo]

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!

[Jwilly]

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 

[cf1213]

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.

[ChondelLO]

@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?

[sg2658]

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.

[RDC31]

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..

[macuser_22]

It appears that today's update (release r20) fixed this bug.

[David4000]

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?

[cf1213]

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.

[dmertz]

There were two related issues:

1. A bug related to the preparation of Form 8606 when the individual has basis in their own traditional IRAs and received a distribution from an inherited IRA.  This is the bug that has been fixed.
2. Intuit (or maybe the IRS, but it seems like it was done by Intuit) chose to block the filing of any tax return that included Form 8606 Part I because the e-filing system had no way to determine if the Form 8606 was affected by #1 or not.  That's the subject of this thread.  This filing block has to be lifted separately and may or may not have been done.

[RDC31]

My return was a backdoor Roth conversion that was getting the inherited IRA issue without having an inherited IRA..I refiled earlier today and return was accepted..so the inherited IRA applying to a backdoor Roth conversion when no inherited IRA exists ahs been fixed..

Happy filing!

[macuser_22]

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@RDC31 wrote:

My return was a backdoor Roth conversion that was getting the inherited IRA issue without having an inherited IRA..I refiled earlier today and return was accepted..so the inherited IRA applying to a backdoor Roth conversion when no inherited IRA exists ahs been fixed..

Happy filing!

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ALL returns with  8606 were blocked because there is no way to easily know if the taxpayer had an inherited IRA or not.