My 1099-R form came with taxable amount (2a) $5500 and "taxable amount not determined" checked. It should be $0 because its all after-tax money. Can I change it to $0?

[Carl]

No. Enter the 1099-R *exactly* as printed. then pay attention to detail on the screens that will follow the data entry screen so that you make the correct selections.

[Ethrex]

The very next screen says "Based on your entry for box 7 on your 1099-R, you don't need to pay any extra taxes on the money taken out of this account.". My 1099-R box 7 has a value of "2-Early distribution (except Roth), exception applies". In 2018 I created a Traditional IRA, contributed my maximum amount with after tax money ($5500), and then converted it all to a Roth IRA. This is why I would expect box 2a to be $0. Anyway, on the next screen TurboTax asks me "Did Devin Inherit the IRA from Bank?" and choose No, then the next screen asks me "What Did You Do With The Money From Bank?" and I chose "Moved the money to another retirement account (or returned it to the same retirement account).". It then asks me how and I chose "Converted all of this money to a Roth IRA." The questions seem to reflect exactly my situation, however the problem is if I go back, and change my box 2a to be $0, the amount of taxes due becomes less. So clearly TurboTax still thinks after all of these screens that I should pay taxes on something which I shouldn't.

[Carl]

@TurboTaxGabeS or @TurboTaxGabi here's a 4th one. Do the programmers still insist everything is working correctly? I still insist they are wrong.

[fanfare]

your 1099-R cannot determine the taxable amount because they don't know how many other IRAs you may have. You must account for ALL your IRAs to determine the tax.

[macuser_22]

@Carl  this has nothing to do with that issue.  The OP's box 7 is a 2.

[macuser_22 · Accepted solution]

You probably failed to enter the non-deductible contribution in  the IRA contribution section first so that it would become non-deductible basis in the IRA. If you do not do that then the entire amount is taxable.

What you are doing is called a "backdoor Roth".  

Be sure that you indicate in the contribution interview that you want the contribution to be non-deductible if that question comes up.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

[macuser_22]

This so-called “back-door Roth”  method ONLY works if you have NO OTHER Traditional IRA accounts.  If you do, then the non-deductible part must be spread over ALL accounts and cannot be withdrawn by itself.  Only if you started with NO Traditional, SEP & SIMPLE IRA and ended up with a zero amount in ALL Traditional, SEP & SIMPLE IRA accounts will this Roth conversion not be taxable.

First you must enter your Traditional IRA contributions (if there were 2018 contributions).

IRA contribution
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),,
Retirement & Investments,
Traditional & Roth IRA contribution.

Be SURE to answer the follow up that the are choosing to make this contribution NON-DEDUCTIBLE - if that screen comes up. (DO NOT say that you moved (recharacterized) the money to a Roth) – this is a conversion, not a recharactorazition.

Then enter the 1099-R that shows the distribution.

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),,
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

 Answer the follow-up questions answer the question that you moved the money to another retirement. The screen will open up with choices of where it was moved.  Choose you converted it to  Roth IRA.

When asked if you have made any non-deductible contributions say " "yes" if you did then enter the non-deductible contributions made for tax years before 2018.     (Usually zero unless you also made a 2017 or earlier non-deductible contribution. If you do have prior year basis then enter the last filed 8606 line 14 value.).

Enter the 2018 year end value of your Traditional IRA a "0" (zero) - if it is in fact zero - this tax free Roth conversion will not work if it is not zero.

[If you had any other Traditional IRA at the end of 2016, then the nondeductible "basis" must be pro-rated over the current distribution and the total IRA value and only a portion of the Roth conversion will be non taxable and part will be taxable, with the remaining non-deductible basis carrying forward for future distributions.  You can never only withdrew the nondeductible basis as long as the IRA exists and has a value more than zero.]

The non-deductible amount of your contribution will be subtracted from the taxable amount of the conversion on then 8606 form and enter on line 4a of them 1040 form and a zero taxable amount on line 4b  if you did it right.

Also see this TurboTax FAQ:
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4350747-how-do-i-enter-a-backdoor-roth-ira-conversion">https://ttl...>

[Ethrex]

This did solve my problem, but I don't feel like it should have. When initially inputting my 1099-R back on Wages & Income it raised my taxes due (as stated in my initial problem). Then there is a separate section @macuser_22 outlined in Deductions & Credits. First -- I selected I have Traditional IRA contributions but no Roth IRA contributions (because I converted to Roth IRA, not contributed), please tell me if that is incorrect. Second, when I input my Traditional IRA contribution, it immediately showed I have less taxes due. This scares me because it makes me think TurboTax is assuming my Traditional IRA is deductible when it is not. Or maybe this is expected behavior because it balances with my earlier 1099-R form? If so that is a very strange way to have a user represent a non-deductible contribution to a Traditional IRA. If I continue through the wizard, it eventually hits a screen which says: "Your modified adjusted gross income (MAGI) is $xxx,xxx which puts you over the limit for IRA deductions. To deduct a contribution, you can't have a MAGI of over $121,000 while being covered by a retirement plan at work." But my taxes due was not increased (after if it was just previously decreased). Its such a strange user interface. Immediately after inputting 1099-R it increases taxes due but then says "you don't need to pay any extra taxes." Then immediately after inputting my Traditional IRA contribution it lowers my taxes due but says "you can't deduct your contribution." It is so confusing. @macuser_22 the steps I took closely follow the FAQ link you provided (<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4350747-how-do-i-enter-a-backdoor-roth-ira-conversion">https://ttl...>) so on one hand the numbers are probably correct - but on the other hand because of the terrible user interface I have no confidence in it.

[macuser_22]

That sounds like the expected behavior.

Like I said, you make the Traditional IRA contribution non-deductible " If that question comes up".

When you are covered by a retirement plan at work and your MAGI exceeds the IRA deduction limits the contribution will automatically be non-deductible because it cannot be deducted.

You can print all forms and worksheets and look at the 8606 form.  Your 2018 non-deductible contribution should be on line 1, the total year end IRA values on line 6, and the taxable calculations on lines 7-17.

The taxable amount should be on the 1040 line 4b, and if done correctly, the contributions offset the tax, and the year end IRA value of zero, the taxable amount on 4b will be zero.