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How to handle IRA converstion to Roth IRA in Turbotax 2019
Our accountant told us that we can pull $14K out of our savings and put it into a Roth IRA for 2019 and 2020, $7K each. She said that our income is too high for a Roth IRA but you can open an IRA and then covert it to a Roth IRA (there is a legal loop hole she said). We created the IRA first and it was converted to a Roth IRA by fidelity.
I tried doing the filing with TurboTax but it penalizes me 6% if I just follow the normal path. I read on the questions that to do that, we have to manually create a 1099-R. I have tried to fill out that form but there is too much information there to fill out since I did not get a 1099-R from fidelity. Is this the right way to do this? or can you advise me on what to do so I don't have to pay the 6% penalty?
Thanks,
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How to handle IRA converstion to Roth IRA in Turbotax 2019
When did you convert it? If in 2020 then you will get the 1099-R next year in 2021 and it goes on your 2020 tax return next year. The only thing that gets entered in 2019 is the 2019 non-deductible contribution that will create a 2019 8606 form with thee contribution on line 1, 3 & 14 that you will need for the 2020 tax return next year.
Hopefully you have sufficient 2019 taxable compensation (money that you worked for such as W-2 or self-employed) to support the IRA contribution.
Also you said "we". IRA's are individual and can be owned by only one spouse.
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.
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How to handle IRA converstion to Roth IRA in Turbotax 2019
Thanks for your quick response. See below for answers and follow up questions:
Yes both the IRA and the Roth IRA conversions were done in April of 2020.
Fidelity has issued two 5498 forms for both IRA's but no 1099-R's.
This is just for my taxes and it is individual. sorry the question was confusing.
Are you saying that I need to add an 8606 form to the return? Is there an interview question or point I need to start from?
Some other posts on this site has recommended doing this using a 1099-R. Are you saying it is not needed for 2019 return, even though I am claiming the IRA for 2019? Please advise
Thanks again
boxsteron
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How to handle IRA converstion to Roth IRA in Turbotax 2019
@boxsteron wrote:
Are you saying that I need to add an 8606 form to the return? Is there an interview question or point I need to start from?
Some other posts on this site has recommended doing this using a 1099-R. Are you saying it is not needed for 2019 return, even though I am claiming the IRA for 2019? Please advise
Yes. You must file the 2019 8606 by entering the 2019 contribution as I said above.
And yes, the conversion must be reported on a 1099-R on your 2020 tax return next year since is was converted in 2020. You will get the 1099-R after Jan 31 2021.