Is there a way to force TT to not count a Roth conversion as income on line 4b? When I enter spouse's 1099-R & indicate it as a Roth conversion, it still shows as income.

[justin-busch]

Interestingly, when I enter my 1099-R and answer the questions (even though more complicated because I had to recharacterize an initial Roth IRA with losses to a traditional IRA, then convert that IRA to a Roth), it does not count my contribution as income on line 4b. I've tried importing the spouse's 1099-$ and inputting manually. I've deleted it (and the 8606-S) multiple times and retried. I've deleted all 1099-Rs and 8606s and re-entered, but it still keeps counting spouse's contribution as income. It seems to be tied to being spouse though.
Oh, I just realized I should also say we are filing as married filing jointly.

[dollyb1930--just fix this]

What a beautiful way to realize your own folly and end it happily.

Love this as common sense prevails and it is your own tax and you are the creator of good and bad.

Good things will always happen to good Samaritans.

Kind Regards

[xmasbaby0]

@dollyb1930--just fix this Your hostile and inappropriate comments have been reported to the moderators.

[justin-busch]

So, i think the problem may be that spouse's conversion was actually a contribution and conversion in March 2022 for the 2021 tax year contribution (spouse is always a year "behind" in contributions). Thus, when answering where the distribution is from, i selected "Pension/...None of the above" rather than "Current year conversion..." (because it's actually a prior year conversion. Regardless, i tried selecting current year conversion and have the same issue. I do still select the option for converting the full amount to a Roth IRA. And in the deduction section, i answer that spouse's contribution was made b/w 1/1/23 and 4/18/23. 

[DanaB27]

Since you made the Roth contribution for 2021 and recharacterized it in 2022 please follow the steps below. You should have entered the recharacterization when you enter the contribution to the Roth IRA on your 2021 tax return.  When you made the contributions nondeductible you should have had a 2021 Form 8606 with the basis on line 14 this will be entered in the retirement section (step 7).

On your 2021 tax return:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “Roth IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution
6. Enter the Roth contribution amount 
7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount (no earnings or losses)
8. TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
9. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (since you are doing a backdoor Roth. If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

To enter the 1099-R conversion on your 2022 tax return: 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "Continue"
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

If you need additional help please provide more details and we will be happy to help you!

[Edited 2/20/2023 |9:00 am PST]

@justin-busch

[justin-busch]

Hi,

Thank you so much for the quick reply @DanaB27 .

I believe I have done those steps you suggested. However, I made a follow-up post, but I believe it was just as you were replying. Your suggestion notes that those are the steps I should follow if the contribution and conversion were made in 2022. For spouse, the contribution and conversion were made in 2022, but the contribution made in 2022 was for the 2021 tax year.  To clarify, spouse made 2021 tax year contribution to traditional IRA and immediately converted to Roth IRA in March 2022. That generated a 1099-R.  Spouse also will be making a 2022 tax year contribution to traditional IRA (and immediate conversion to Roth) in the upcoming days prior to 4/18/23). Our income dictates that it is not deductible, so we don't get the option to select it as non-deductible, TT just automatically seems to do that, but it does show $0 deductions, which seems correct. The problem seems to be on the income portion where it is treating spouse's 2021 contribution/conversion as income. I don't know what I am entering incorrectly. I have tried various combinations that each seem possible correct (and even some that seem wrong just to see if it changed anything even though I didn't intend to file it that way). Regardless, it always seems to treat the spouse TY2021 contribution/conversion from the corresponding 1099-R as income on line 4b.

Thanks again

[DanaB27]

I had edited my answer above on how to enter the basis from your 2021 tax return.

For the traditional IRA contribution for 2022 (that your spouse plans to make in the next few days) you will enter the contribution with these steps on your 2022 tax return:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

Since the conversion of the 2022 contribution will take place in 2023 you will enter another conversion next year on your 2023 tax return. On your 2022 tax return, you will have a basis on line 14 Form 8606 to carry over to your 2023 tax return.