I converted trad'l IRA contributions from previous years into a Roth this year. How do I indicate this in Turbo Tax to avoid being penalized for too high income?

[FresnoFred]

I moved $4k from a traditional to Roth this year, and TTax is telling me my income is too high (filing married, separate). That $4k was accumulated over several years and put into a Roth this year. Is there a way to avoid this penalty?

[MichaelL1 · Accepted solution]

OK, if you are getting that message it appears it was entered as a contribution for 2017.  It is not contribution as it is a rollover.

First thing to do is:  Go to Deductions and Credits, down to Retirement section then to IRA contributions and remove it from here as no contribution was made.

Then make sure the 1099R is correctly entered and this will taxable income going from Traditiional to a Roth.

 To enter pension and annuity Payments (1099-R)

• Click on Federal Taxes (Personal using Home and Business)
• Click on Wages and Income (Personal Income using Home and Business)
• Click on I'll choose what I work on (if shown)
• Scroll down to Retirement Plans and Social Security
• On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button

[FresnoFred]

I have not received a 1099-R and have contacted the managing company (Vanguard) to make sure I should have. Would there be some reason I did not receive a 1099? I did an exchange between my traditional and Roth IRAs, simultaneously selling the traditional and buying Roth shares. Does this change anything?

[MichaelL1]

Anytime there is Traditional to a Roth a 1099R will be issued.  Talk to company however there are not due to be out until tomorrow 1/31/2018

[FresnoFred]

Got it. Thanks a bunch for your help and providing simple, straightforward answers. Very much appreciated.

[MichaelL1]

My pleasure