How do I make sure TurboTax is not counting non-taxable IRA and Roth IRA related rollovers and conversions as taxable income?

[bowledw]

I have a company-sponsored 401k program that allows me to make contributions on a post-tax basis. In 2018 I took some of these post-tax contributions and rolled them over into a Traditional IRA. After that, the Traditional IRA was converted into a Roth IRA. I've uploaded both of my Form 1099-R's related to both transactions to TurboTax, but at the moment, TurboTax wants to treat the IRA to Roth IRA conversion as federally and state taxable income (which it's not). How do I fix this or otherwise force TurboTax to treat this activity as rollover/conversion activity and not a taxable distribution?

[DanaB]

What is the code in box 7 on the 1099-R for the conversion from traditional to Roth?

[bowledw]

It's a 2.

[bowledw]

In box 2b, "Taxable amount not determined" is checked. When i change the amount in 2a from the total amount of the Gross Distribution to zero, it changes TurboTax's tax estimate. Shouldn't TurboTax be ignoring what is in box 2a given that the box in 2b is checked?

[macuser_22]

No.   Box 2a is the  taxable amount unless you have non-deductible basis in the IRA that the interview will ask for if you do.

[DanaB]

After you entered/uploaded your 1099-R there should be questions what did you do with the money and an option to enter the basis you had. Please see the instructions below:

1. Login to your TurboTax Account 
2. Click "Take Me To My Return"
3. Click "Federal" from the left side of your screen
4. Scroll down and click "Start or Edit/Add" next to "IRA, 401(k), Pension Plan Withdrawals (1099-R)" 
5. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
6. Click "I'll Type it Myself"
7. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
8. Click "Continue" and enter the information from your 1099-R
9. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
10. Then choose “I converted all of this money to a Roth IRA account.”
11. On the "Your 1099-R Entries" screen click "continue"
12. Answer "yes" to "Any nondeductible Contributions to your IRA?"
13. Answer the questions about the basis

[bowledw]

In box 2b, "Taxable amount not determined" is checked. When i change the amount in 2a from the total amount of the Gross Distribution to zero, it changes TurboTax's tax estimate. Shouldn't TurboTax be ignoring what is in box 2a given that the box in 2b is checked?

[Peter72]

I was having the same issue as bowledw - I had made a non-deductible contribution to a Trad IRA and then converted that to my Roth IRA (also called a Backdoor Roth).  I went through the steps listed by DanaB to no avail until I realized that I hadn't told TTx (or wasn't given the opportunity) that I had made a contribution to my Trad IRA that tax year.  Once I navigated to that screen and completed the interview process for IRA contributions, my Trad IRA to Roth IRA conversion was then not treated as a taxable event.

[Whyme3]

I've gone back and tried to fix this as well and TTx is still including my IRA contributions as income. So frustrating.

[EbonyL122824]

A solution has been posted above your post in the same thread. See this link here. If you need further assistance, contact customer support here.

[littlepye]

I followed these directions.  Turbotax still counts as income the total amount converted to a Roth without subtracting the nondeductible IRA contributions. This significantly increases my tax bill.

[littlepye]

I followed the DanaB directions. TurboTax still does not subtract the nondeductible basis.

[MarilynG1]

@littlepye Entering the 1099-R you received and specifying your non-deductible contributions are essentially two separate entries. 

Enter your non-deductible contributions first, then enter your 1099-R.

Click this link for more info on Roth Conversions. 

If you didn't get the question after entering your 1099-R asking about 'non-deductible contributions', you could delete the 1099-R and re-enter it to get this question to come up so you can enter your basis amount. 

Click this link for more info on Non-Deductible Contributions Converting to Roth. 

[littlepye]

The TurboTax questions do not allow me to enter the nondeductible contributions first.  I enter Line 1-Gross distribution.  TurboTax does "remember" my nondeductible contributions but does not subtract this amount from the Gross Distribution amount.  So, TurboTax figures tax on the Gross distribution.

[MarilynG1]

@littlepye Non-deductible IRA contributions are entered in the 'Deductions & Credits' section.

Click this link for more info on Non-Deductible IRA Contributions.