I transferred $5,500 to Traditional IRA from my bank account, and then converted to Roth IRA. However, it was counted as taxable distribution at Turbotax. Could you help?

[macuser_22]

Did you enter the IRA contribution?   I assume you want it to be a after-tax non-deductible contribution so indicate that in the interview if it asks.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

[Coleen3 · Accepted solution]

If there is no Code G on your 1099-R for your IRA, you need to tell the program that you rolled the money over in a timely manner (60 days).

(See the attached screenshot below. Click to enlarge.)

[Mike-Zhang]

Thanks for the comments. I followed your screenshot, and entered $5,500 was converted to Roth IRA. However, the $5,500 still shows as taxable distribution. As you know, the $5,500 is after tax money since it's from my bank account, and therefore is shouldn't be taxed again when I did the conversation. Anything else I can try?

[macuser_22]

In addition to the 1099-R you must enter the non-deductible contribution as I said in a comment above.  That will produce a 8606 form to offset the tax as long as you did not have any other Traditional IRA open at the end of 2017- then the tax will be prorated.

[Mike-Zhang]

Great. That works for the $5,500 I contributated for 2017. Thanks.
However, besides the one above, I also transferred $5,500 to Traditional IRA for 2016 from my bank account on 3/1/2017, and then immeidatedly converted to Roth IRA. Somehow I forgot to enter this into Turbotax when I filed 2016 tax return last year. Is there anything I can do to put that $5,500 for 2016 as non-taxable?

[macuser_22]

If you failed to report a 2016 IRA contribution on yiur 2016 tax return then you mist amended 2016 to either take a deduction or create a 2016 8606 form attached to the amended return.  If there is no other reason to amend other then to file the missing 8606 for a non-deductible Traditional IRA contribution you can file a stand-alone 8606 with the non-deductible contribution on line 1, any other prior years non-deductible basis on line 2, the total of  1&2 on line 3 and 14, and mail that to the IRS.   Be sure to use a 2016 8606 form.

For 2017 you would enter this as the prior year non-deductible contribution in the interview when it asked if you tracked your non-deductible contributions.

<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f8606_16.pdf">https://www.irs.gov/pub/irs-pdf/f8606_16.pdf</a>
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i8606_16.pdf">https://www.irs.gov/pub/irs-pdf/i8606_16.pdf</a>

[SweetieJean]

"As you know, the $5,500 is after tax money since it's from my band account" Please elaborate.

[Mike-Zhang]

Thank you very much. I put $5,500 for 2017 at line 1 and $5,500 for 2016 at line 2. Now I'm able to put both $5,500 for 2016 and 2017 non-taxable. Will fine a stand-along 2016 8606 form for the nondeductible $5,500 for 2016.

[Mike-Zhang]

Thank you very much. I put $5,500 for 2017 at line 1 and $5,500 for 2016 at line 2. Now I'm able to put both $5,500 for 2016 and 2017 non-taxable. Will fine a stand-along 2016 8606 form for the nondeductible $5,500 for 2016.

[Mike-Zhang]

That should be "from my bank account" instead of "from my band account." Sorry for the typo.