How do I code my Traditional IRA to Roth conversion for PA State tax?

[LMaash]

There is no code on Turbo tax for a conversion. I do not know how to complete this section without the correct code. This is not a backdoor conversion. It is taxed federally, but should not be taxed by PA.

[DanaB27]

TurboTax should make it automatically nontaxable on the PA return since conversions are not taxable in PA.  Please make sure that you entered the conversion correctly during the federal interview and then it shouldn't be included in your PA Gross Compensation line 1a.

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
5. Click "I'll Type it Myself"
6. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
7. Click "Continue" and enter the information from your 1099-R
8. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
9. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"

[LMaash]

@DanaB27 This is exactly what I did for Federal taxes. That end is fine, but on the PA state side, there is no option for me to report the conversion so it isn't taxed. I have called and Turbotax seems to be confused, too. I don't know what to do. 

[LMaash]

@DanaB27 "TurboTax should make it automatically nontaxable on the PA return since conversions are not taxable in PA.  Please make sure that you entered the conversion correctly during the federal interview and then it shouldn't be included in your PA Gross Compensation line 1a."

They do not. They provide you with a screen and ask you about the "description of the distribution" to which there is no button that says conversion. 

[DanaB27]

I didn't get the screen you are talking about. Maybe try to delete Form 1099-R from the federal interview, clear your cache, delete your cookies, and reenter the Form 1099-R with the instructions above.

If you are still having issues after that, it would be helpful to have a TurboTax ".tax2021" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Online: 

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

[LMaash]

@DanaB27 I followed the steps, and again, when I get to state taxes, it asks: What kind of retirement income do you have from Pennsylvania?

It cites the company that I listed in my 1099-r, but once again, does not have a choice for a conversion. This is where I get stuck every time, and I don't know how to continue. 

[DanaB27]

It would be best if you send us a diagnostic file and comment here with the token code, so I can take a look at what is going on:

You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Online: 

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

@LMaash

[LMaash]

@DanaB27 Ok, I think I have resolved the issue. Tell me if this is correct:

I said what the retirement plan was (Roth, under 59) and then on the following page, I entered the basis number as the amount rolled over (since it was blank). This should solve the problem, right?

[DanaB27]

Yes, that should solve the issue. Please verify, that it isn't any longer included in the PA Gross Compensation line 1a. 

[LMaash]

@DanaB27 Yes, it is no longer in the PA Gross Comp. I just want to verify that I entered this correctly on the taxes. Do the steps I completed sound appropriate?

[DanaB27]

Yes, it sounds like you entered the appropriate steps to fix your issue.