I have 3 separate IRA distributions.
1)Roth Conversion from 401k
2)Backdoor Roth
3)Inherited IRA (from father).
On the Federal return, it's handled correctly. The Roth Conversion and Inherited IRA distributions are taxed, but the backdoor is not since it was with a non-deductible contribution.
However, on the NJ State Return, the Roth Conversion is correctly taxed, but both the Backdoor and Inherited IRA distributions are showing up as non-taxable. The distribution from the Inherited IRA should be taxable.
Form 8606 and IRA worksheets seem to be correct.
After further research, Turbo Tax is probably correct.
NJ does not tax the portion of the IRA distribution that reflects contributions. Since contributions are not deductible when they were made, they were already taxed and thus would not be double-taxed.
The portion of the distribution that reflects Gains, however, should be taxed. In my case, my 1099-R has a blank for the state distribution so TurboTax is using 0 as the gains portion of the distribution.
NJ prorates the basis according to the ratio of unrecovered basis to year end value.
This is the same idea as Form 8606 but differently implemented.
TurboTax supports NJ if you tell TurboTax your remaining original contributions, in this case the owner's original contributions and Inherited IRA year end value.
You must use the step-by-step interview.
TurboTax won't support the situation where your IRA has a basis and the Inherited IRA has a basis and a distribution is taken from both in the same year.