How to handle IRA converstion to Roth IRA in Turbotax 2019

[boxsteron]

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,

[macuser_22]

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.

[boxsteron]

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

[macuser_22]

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@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

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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.