Solved: For a Traditional IRA to Roth IRA conversion my 1099-R lists the taxable amount as total distribution. If my calculated taxable amount should be less what do I do?
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For a Traditional IRA to Roth IRA conversion my 1099-R lists the taxable amount as total distribution. If my calculated taxable amount should be less what do I do?

 
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Employee Tax Expert

For a Traditional IRA to Roth IRA conversion my 1099-R lists the taxable amount as total distribution. If my calculated taxable amount should be less what do I do?

TurboTax will help you determine the taxable amount.  (If it was a nondeductible TIRA that was converted, only the growth on the IRA will be taxed).  However, it is important to enter in the 1099-R exactly as you receive it and follow the interview afterwards to have the non-taxable portion subtracted out of taxable income.  You may want to delete the 1099-R, and re-enter it using these instructions:

  1. Enter in the information exactly as reported on the 1099-R for this IRA in the main portion of the screen  (Even if box 2a has an amount, "taxable amount not determined" should be checked, and box 7 probably has a code 2).  Hit Continue.
  2. Next screen says Good News: You Don't Owe Extra Tax on This Money (this means there's no penalty, but the income still needs to be reported correctly to be removed from taxable income).  Hit Continue.
  3. Next screen:  Did You Inherit the IRA from This Payer?  Probably No.  Hit Continue.
  4. The next screen asks:  What Did You Do With The Money From This Payer?  First, select I moved the money...and then I converted all of this money to a Roth IRA account.
  5. After a few screens relating to Disaster Payments, you come to a screen asking Any Nondeductible Contributions to Your IRA? Click YES and Continue.  
  6. Enter how much was your total Basis on December 31, 2017.  This is the amount of total nondeductible contributions you've made throughout the years.  This information is on Form 8606 from your 2017 tax return. (Contributions that you report in this year reported as part of the conversion will also be factored in and not taxed).  

You will still have a few questions after this, but you will see the portion of your distribution that was from your nondeductible contributions will have been excluded from your taxable income.

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Highlighted
Employee Tax Expert

For a Traditional IRA to Roth IRA conversion my 1099-R lists the taxable amount as total distribution. If my calculated taxable amount should be less what do I do?

TurboTax will help you determine the taxable amount.  (If it was a nondeductible TIRA that was converted, only the growth on the IRA will be taxed).  However, it is important to enter in the 1099-R exactly as you receive it and follow the interview afterwards to have the non-taxable portion subtracted out of taxable income.  You may want to delete the 1099-R, and re-enter it using these instructions:

  1. Enter in the information exactly as reported on the 1099-R for this IRA in the main portion of the screen  (Even if box 2a has an amount, "taxable amount not determined" should be checked, and box 7 probably has a code 2).  Hit Continue.
  2. Next screen says Good News: You Don't Owe Extra Tax on This Money (this means there's no penalty, but the income still needs to be reported correctly to be removed from taxable income).  Hit Continue.
  3. Next screen:  Did You Inherit the IRA from This Payer?  Probably No.  Hit Continue.
  4. The next screen asks:  What Did You Do With The Money From This Payer?  First, select I moved the money...and then I converted all of this money to a Roth IRA account.
  5. After a few screens relating to Disaster Payments, you come to a screen asking Any Nondeductible Contributions to Your IRA? Click YES and Continue.  
  6. Enter how much was your total Basis on December 31, 2017.  This is the amount of total nondeductible contributions you've made throughout the years.  This information is on Form 8606 from your 2017 tax return. (Contributions that you report in this year reported as part of the conversion will also be factored in and not taxed).  

You will still have a few questions after this, but you will see the portion of your distribution that was from your nondeductible contributions will have been excluded from your taxable income.

**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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