How do I make sure TurboTax is not counting non-taxable IRA and Roth IRA related rollovers and conversions as taxable income?

Forum|Forum|7 years ago
June 4, 2019
6 replies
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I have a company-sponsored 401k program that allows me to make contributions on a post-tax basis. In 2018 I took some of these post-tax contributions and rolled them over into a Traditional IRA. After that, the Traditional IRA was converted into a Roth IRA. I've uploaded both of my Form 1099-R's related to both transactions to TurboTax, but at the moment, TurboTax wants to treat the IRA to Roth IRA conversion as federally and state taxable income (which it's not). How do I fix this or otherwise force TurboTax to treat this activity as rollover/conversion activity and not a taxable distribution?

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DanaB27

Level 15

What is the code in box 7 on the 1099-R for the conversion from traditional to Roth?

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bowledwAuthor

Level 2

It's a 2.

bowledwAuthor

Level 2

In box 2b, "Taxable amount not determined" is checked. When i change the amount in 2a from the total amount of the Gross Distribution to zero, it changes TurboTax's tax estimate. Shouldn't TurboTax be ignoring what is in box 2a given that the box in 2b is checked?

macuser_22

Alumni - Champ

No. Box 2a is the taxable amount unless you have non-deductible basis in the IRA that the interview will ask for if you do.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

DanaB27

Level 15

After you entered/uploaded your 1099-R there should be questions what did you do with the money and an option to enter the basis you had. Please see the instructions below:

Login to your TurboTax Account
Click "Take Me To My Return"
Click "Federal" from the left side of your screen
Scroll down and click "Start or Edit/Add" next to "IRA, 401(k), Pension Plan Withdrawals (1099-R)"
Answer "Yes" to the question "Did You Have Any of These Types of Income?"
Click "I'll Type it Myself"
Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
Click "Continue" and enter the information from your 1099-R
Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
Then choose “I converted all of this money to a Roth IRA account.”
On the "Your 1099-R Entries" screen click "continue"
Answer "yes" to "Any nondeductible Contributions to your IRA?"
Answer the questions about the basis

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bowledwAuthor

Level 2

smokey36

Level 2

To ensure you do the Roth IRA backdoor conversion and the contribution doesn't get marked as taxable income, I had to follow the instructions from this link:

"2. Inside TurboTax, search for ira contributions and select the Jump to link in the search results"

Only once I had followed the rest of the instructions and selected Yes, make part of my IRA contribution nondeductible and THEN returned to the 1099R upload section was I able to ensure that the Backdoor Roth IRA conversion was not counting as taxable income.

To confirm you've done everything correctly:
1) left hand side, go to tax tools -> tools

2) click view tax summary

3) left hand side -> preview my 1040

4) Section: "Form 1040 or Form 1040-SR, Lines 1 - 7" - line 4b should show you a taxable amount of 0.

I'm honestly amazed and how unintuitive TurboTax is. Hopefully this saves another person the 3 hours of wasted time that I lost.