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How do I avoid paying additional tax for converting from Traditional to Roth IRA if rollover from pretax 401K to Tra IRA occurred after the conversion both in 2017?
Last year, I converted traditional to Roth IRA which resulted in a 0 balance on my traditional IRA account. I then did a rollover of my pre-tax 401K fund to Traditional IRA to keep things clean.
For the conversion to Roth, I thought I only owe tax on capital gains since all my contribution to Traditional IRA was nondeductible. However for some reason, TurboTax is using some of the rollover amount to calculate the tax owed. The tax owe amount goes up whenever I enter the Dec 31 2017 Traditional IRA balance (which is the rollover amount). If I put in 0, then the correct tax amount owed is displayed. How do I correct this or am I not doing this right? Thank you.
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How do I avoid paying additional tax for converting from Traditional to Roth IRA if rollover from pretax 401K to Tra IRA occurred after the conversion both in 2017?
Unfortunately, by rolling the 401(k) to a traditional IRA in the same year as you converted an amount only a bit more than your basis in nondeductible traditional IRA contributions, you've caused your conversion to be largely taxable. There is nothing you can do now to reduce the taxable amount of the conversion (other than recharacterizing the conversion back to a traditional IRA, something that will not be possible for conversions done in 2018 and beyond due to the recent tax-law changes). This is an mistake that many people make.
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How do I avoid paying additional tax for converting from Traditional to Roth IRA if rollover from pretax 401K to Tra IRA occurred after the conversion both in 2017?
Unfortunately, by rolling the 401(k) to a traditional IRA in the same year as you converted an amount only a bit more than your basis in nondeductible traditional IRA contributions, you've caused your conversion to be largely taxable. There is nothing you can do now to reduce the taxable amount of the conversion (other than recharacterizing the conversion back to a traditional IRA, something that will not be possible for conversions done in 2018 and beyond due to the recent tax-law changes). This is an mistake that many people make.
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How do I avoid paying additional tax for converting from Traditional to Roth IRA if rollover from pretax 401K to Tra IRA occurred after the conversion both in 2017?
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How do I avoid paying additional tax for converting from Traditional to Roth IRA if rollover from pretax 401K to Tra IRA occurred after the conversion both in 2017?
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How do I avoid paying additional tax for converting from Traditional to Roth IRA if rollover from pretax 401K to Tra IRA occurred after the conversion both in 2017?
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How do I avoid paying additional tax for converting from Traditional to Roth IRA if rollover from pretax 401K to Tra IRA occurred after the conversion both in 2017?
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