I received a letter from IRS today for my 2017 taxes for three items. This post is where they claimed I had $11,000 of retirement income taxables that was unreported.

[Spouse1234]

The $11,000 was a non-deductible contribution to an IRA for 2016 and 2017, followed the next day for each of a conversion to a Roth IRA. TurboTax shows a Form 8606 with a $0 on Line 18, so not sure what the problem is. TurboTax only asked for my 5498s, which I can provide, but does anyone understand what the issue is? I remember really wrestling with this when I did my taxes then. The Traditional IRA was otherwise empty.

[Critter]

If you purchased Audit Defense for your tax return, call Tax Resources, Inc. at (877)-829-9695, or report your notice on their web site at http://intuit.taxaudit.com/. Do not contact the IRS. Let Tax Resources contact them for you.

This is the membership email you should have gotten:  https://ttlc.intuit.com/questions/1901569-when-will-i-get-my-audit-defense-membership-kit

Also read the member agreement at this website -https://turbotax.intuit.com/corp/auditdefense.jsp

If you did not purchase Audit Defense:

TurboTax has a special phone number for help with IRS tax letters, which will be easier than going through regular Customer Support.   At the page below, click on the blue button that says "Get Help from TurboTax Support".  Then it will ask you what tax year is your letter.  Then it will ask you what the letter concerns. Then it will show you the phone number during posted business hours.

https://support.turbotax.intuit.com/irs-notice/audit-support/

[Anonymous]

did you report the 1099-R on your returns

Doing a "backdoor Roth" in TurboTax is a 2-step process.

First, go to Federal Taxes > Deductions & Credits > I'll Choose What to Work On > Retirement and Investments > Traditional and Roth IRA Contributions. Enter the contribution to the Traditional IRA (TIRA) that you made. Depending on your income and if you have a retirement plan at work, TurboTax will either tell you that your contribution is not deductible or it will ask you "Do you want to make your IRA contributions nondeductible?"

Once TurboTax knows that your TIRA contributions are nondeductible (that is, you have a basis in your TIRA), then enter your 1099-R at Federal Taxes > Wages & Income > I'll Choose What to Work On > Retirement Plans and Social Security > IRA, 401(k), Pension Plan Withdrawals (1099-R). For a Roth conversion, the 1099-R usually has a Distribution Code 2 in Box 7. That means it is an early distribution but an exception applies so there is no penalty.

To check that the right results show, look at your 1040 form. There should be no entry on Line 32 for IRA deduction. The Box 1 amount from your 1099-R should appear on Line 15a of your 1040, but Line 15b should be zero.

[Spouse1234]

I checked my tax return and I think it was correct. 1040 Box 15a is $11,000, 15b is $0, 32 is blank. Box 7 of both 1099-R forms have a 2. Maybe IRS just wants the 5498 for proof?

[Critter]

On the 8606 line 8 may be the issue ... did you include ALL of your year end values from ALL traditional IRAs ?  A backdoor roth contribution only works when you have no other IRA balances.

[Spouse1234]

Line 8 on the 8606 for my wife is empty. Note that she had no balance in her Traditional IRA at the times we did the deposits and conversions. I do have quite a bit in my Traditional IRA, but I did NOT make any backdoor contributions.

[Critter]

Well make sure the 8606 was in her name ... if it is then the IRS could be wrong ... would not be the first time.  Call them and see if this is something that can be handled  on the phone ... simply say " Can you help me understand this ?  I think I was right and you are wrong."  Then be prepared to support your position.  

[Spouse1234 · Accepted solution]

It's all in her name. Fidelity said just submit the 5498s, which I just printed out. On the phone with TurboTax now.

[Critter]

TT cannot help you ... call the number on the IRS notice.

[Spouse1234]

Just want to let everyone know that TurboTax accepted this, so it is done. Thanks everyone for the help. However, one of the other issues, they did not (dependent daycare) they did not, so let me post on that thread