Massachusetts tax shows back door roth conversion as income

[DanaB27]

Thank you, I review your token. It seems you have the wrong entry on line 11 Schedule R/NR this should come from Schedule X. A workaround to be able to file would be to edit the numbers on Schedule R/NR in Form Mode to match Schedule X without needing to override anything. 

@CYL 

[CYL]

Thanks. @DanaB27 that's exactly what I mean. Form 1 NR/PY line 11 should match schedule x line 7, but it didn't. That's the problem I'm referring to. To change it to match, or show 0, I have to override line 11 in form mode. Cuz it's a linked data which doesn't allow me to simply change the number. 

[DanaB27]

In your case you had to use Schedule R/NR and line 11 on Form 1-NR/PY came from line 11 on Schedule R/NR. But Schedule R/NR has incorrectly $6,000 on line 11, it should be $0 (from Schedule X). Since the software won’t be corrected by the due date a workaround (to be able to file) would be to edit the numbers on Schedule R/NR in Form Mode to match Schedule X without needing to override anything on Form 1-NR/PY.

@CYL

[CYL]

@DanaB27 Thank you! I was able to modify column A and B of schedule R/NR and that did the trick to remove $ from form 1 NR/PY line 11. 

[WesternMassOutdoors]

Sorry I'm being silly here. I did a backdoor roth IRA for the maximum 2023 allowed of $6500 and I'm a full time resident of Massachusetts. On the Taxable IRA/Keogh Distributions interview page, do I enter the full "$6500" that I deposited in a Traditional IRA and performed a conversion to Roth on in the box for "Other Contributions Previously Taxed by Massachusetts" if my Traditional IRA balance is 0 and all money in now in my Roth IRA account?

[Sps1981]

If i am correct and this is the first time you are doing it then -

Other Contributions Previously Taxed by Massachusetts - $6500

And the second question, Total Distributions Received in Previous Years” - $0

If you do the same for 2024 ($7000 is the limit), then the respective amouts are - $13500 and $6500.

This way you can keep a cumulative track if I am correct. That's what i did this year as 2022 was my first time doing back door roth ira.

Cumulative is the correct way in case you start mismatching contributions and conversions. 

Check this page out - https://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html

Might be helpful.

[WesternMassOutdoors]

Thanks for the reply!

I'm not sure I agree with you about what I may be doing in 2024: recall that this is only about taxable Distributions from a traditional IRA for Massacusetts. In 2024, when I max out a backdoor Roth, I'll be depositing $7000 in the Traditional IRA and withdrawing that $7000 as soon as it clears by converting the funds to my Roth IRA. This would mean that my 1099-R next year will show I took a $7000 distribution, which Massachusetts should treat as "Previously Taxed by Massachusetts" since that $7000 is 100% post tax contribution (not gains) that is converted into a tax-advantaged retirement account, not distributed to a checking account.

This would mean next year MA interview will be about $7000 and I enter "$7000 previously taxed" and "$0 received in previous years": because of the 1099-R reported distribution I didn't take any of it out in a different tax year. Sorry if I'm just muddy the waters here: the MA interview question is very confusing in its wording

[Sps1981]

Total Distributions Received in Previous Years. The emphasis here is previous years. Not "YEAR".

If you google about this topic there sre forums where people doing both ways.

The cummulative approach is easy to track down the line. 

Yes i agree the instructions on TT is not clear but if you look at the form 1 instructions for schedule X i think on page 19 or 20 they explain what is being done here. In those terms cummulative makes sense. My recommendation try out the work sheet which is very easy and see both ways if you were to do this in 2024 as well. If i am correct it ends up being the same final math.

In the instructions they clearly state - Since MA does not allow a deduction for amounts originally contributed to IRA or Keogh, the distributions are not taxable untill the full amount of your contributions which were previously subject to MA taxesbsre recovered. So if you look at it that way then you need to keep a track of all thr contributions and distributions. This is my understanding and please don't quote me on it. No tax professional here. 

Also distributions does not mean just to your checking account. If the money is moved from a trad ira to another account here being roth ira it is called distribution. The monent you touch the money in trad ira it is an event.

I hope this makes sense. 

[stoneyjeep]

This comes under for what it is worth (FWIIW?)

I have posted before on the MA tax code with regards to Roths.

I read in the Federal Tax Code yesterday (Hat Tip to Mr. Caron, CPA) that if you your 1099 gives a T for a Roth that you know deserves a Q, "the preparer should use the Q designation".

This would save some time and effort of changing Ts to Qs when preparing the Massachusetts State Return.

[Sps1981]

What??