How do I handle in TT including the small income I received in the process? With the $6500 contribution, conversion, and withdrawal, I should only have a taxable transaction of the increase in value, about $350. Thanks...
1) Enter the $6,500 Traditional IRA contribution and mark it non-deductible.
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.
2) Enter the 1099-R for the Traditional IRA to Roth conversion.
Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).
OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.
Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.
When is asks what you did with the money - you moved it to another account. Then the next screen - you converted it to a Roth.
You will be asked if you tracked your non-deductible basis in the Traditional IRA - say yes, but do not enter an amount for the 2016 contribution, only prior year basis if any.
Your Traditional IRA to Roth conversion will only be non-taxable if the year end value of all Traditional IRA accounts that you might have is zero - enter the 2016 year end value (hopefully it is zero).
When done,the $6,500 contribution should be taxable on line 15a on the 1040 form and nothing on 15b.
Don't worry about the income summary screen as it will show the total of both distributions - taxable or not.
What is telling you an excess?
Did you enter the Traditional IRA contribution in the IRA contribution section?
Are you over age 50 to allow a $6,500 contribution? Did you have at least $6,500 of net earned income (money that you worked for) to allow the contribution?
I did the Trad IRA in the proper place, IRA Contributions. I am over 50 and have income above the IRS limit for IRS deductibility. Thank you!
No, it is trying to hit me for a $13000 income increase. I can handle the Trad IRA and the conversion to Roth, how do I handle the cash-out of the Roth and the $350 net income in the process? Again, thanks.
Also do you have any Traditional IRA accounts open as of Dec 31, 2016?
Box 7 "Yes IRA-SEP-SIMPLE" and Code 2, I have one 1099-R for the conversion from Trad to Roth only. I plan on "making" one for the cash-out since it took place after the new year, but will be reported in 2016. I have calculated the amount to be reported as taxable due to making a bit of a return.
Then forget the last part of the answer below for the 2nd 1099-R that you do not have. You *cannot* report the Roth distribution on your 2016 tax return if it took place in 2017. You will report that next year in 2018 after you receive the 1099-R for that distribution.
1) Enter the $6,500 Traditional IRA contribution and mark it non-deductible.
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.
2) Enter the 1099-R for the Traditional IRA to Roth conversion.
Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).
OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.
Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.
When is asks what you did with the money - you moved it to another account. Then the next screen - you converted it to a Roth.
You will be asked if you tracked your non-deductible basis in the Traditional IRA - say yes, but do not enter an amount for the 2016 contribution, only prior year basis if any.
Your Traditional IRA to Roth conversion will only be non-taxable if the year end value of all Traditional IRA accounts that you might have is zero - enter the 2016 year end value (hopefully it is zero).
When done,the $6,500 contribution should be taxable on line 15a on the 1040 form and nothing on 15b.
Don't worry about the income summary screen as it will show the total of both distributions - taxable or not.