I have a 1099-R (Roth) that I directly rolled to another Roth IRA. The "distribution code" is "H" which is for a direct rollover. Why is Turbo Tax counting it as income?

"Income" simply means that the distribution needs to be shown on your tax return.  However, code H indicates a rollover to a Roth IRA from a designated Roth account in an employer plan, and such a Form 1099-R must always have a zero in box 2a indicating that the distribution is nontaxable.  Because it is nontaxable, the only place on your tax return that the distribution appears is on Form 1040 line 4a and has no effect on any other part of your tax return.

I think I have a similar question.  I did a direct rollover from a non-Roth 401K to a non-Roth IRA.  The code for a non Roth rollover is a "G".  My rollover is not taxable now (taxable when I take distributions).  But this transfer didn't provide me any extra income.  Why should it show as increasing my income??

 

To ensure to rollover is correctly entered into TurboTax, TurboTax should ask you the following questions after you entered the 1099-R with code G:

 

1. On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
2. On the "Did you move the money to a Roth IRA?" screen answer "No"

 

Please be aware that the whole distribution will show as income in TurboTax on the summary screen which shows gross income, not taxable income. To verify that the entry is correct please look at form 1040 line 5b (taxable amount), it should show $0 and state ROLLOVER next to it.

 

To preview Form 1040:

 

1. Click on "Tax Tools" in the left menu
2. Click "Tools"
3. Click "View Tax Summary" in the Tool Center window
4. Click on "Preview my 1040" on the left