Partial Roth conversion of IRA distribution

[ronroberts]

In past years my entire SEP IRA distributions have been for Roth conversions. Also until this year Schedule B has never been included in my tax return.

This year only part of my SEP IRA distribution was a conversion. I was prompted to enter the amount converted, which I did. I believe this is what triggered schedule B to be included as there were no other significant changes. 

So, my entire distribution was included on the main 1040 sheet as taxable. The converted amount was also added to part 3 of schedule B as a taxable amount.

What is the purpose of breaking out the conversion? I do not think I was double taxed due to breaking it out of the total distribution and adding it to schedule B. I also am aware that the IRS wants to track Roth conversions for the purpose of making sure funds have been in the roth long enough to qualify. So, why was schedule B never included in past years? 

In past years Turbo Tax downloaded my form 5498 which wasn't yet ready this year. 5498 has the conversion information. When TT is able to access 5498 does that preempt adding schedule B? 

Was I mistaken to file my taxes without form 5498? I assume not or TT would have prevented it knowing I made a roth conversion. Also Fidelity shows it will not be available until mid May which is past filing deadline.

Sorry for the long post and many questions and details. I hope they can be answered thoroughly. I didn't want to start separate threads for them.

[dmertz]

Entering the Form 1099-R for a distribution from a SEP-IRA cannot be the cause of Schedule B being present in your tax return.  The Schedule B is reporting something unrelated, probably from a Form 1099-INT or 1099-DIV.

As you pointed out, the purpose of breaking out the conversion is so that TurboTax can track the converted amount as conversion basis with respect to your Roth IRAs.

Form 5498 reports information to the IRS that you should already know based on your transaction history and account statements.  There is no need to have Form 5498 in hand when preparing your tax return.

[ronroberts]

Thanks for your reply dmertz.  I am more confident that everything is OK on my return. I am still puzzled though why Schedule B has never shown up in past years since I am not seeing any other changes this year over the past years. In past years my returns included 1099-INT, and 1099-DIV.  The only change this year was that not all of my IRA dist was converted to Roth, and 2024 was my first year collecting SS.

[dmertz]

It would seem that the issue is with your previous tax returns.  Either your recollection that no Schedule B was present is incorrect or you didn't enter any Forms 1099-INT showing taxable interest and you didn't any Forms 1099-DIV showing ordinary dividends.

[ronroberts]

Looking over my 2023 return both interest and divs are shown on my 1040. TT got this information from pulling my forms from Fidelity Investments. I reviewed my 2023 return which was prepared by TT and no Schedule B is showing on the return. It goes from the 1040 and then Schedule D for capital gains. My interest earned was greater in 2024 compared to 2023 but both years were over $10. $10 is the amount over which it needs to be reported, correct?

[dmertz]

All interest is to be reported on your tax return.  $10 is just the interest threshold above which the financial institution is required to issue a Form 1099-INT.  For amounts below that you would enter it as if the financial institution had issued a Form 1099-INT.

It's possible that your Forms 1099-DIV reported only items other than ordinary dividends and had nothing in box 1a.