1099R state tax withheld

[Gaizka10]

I contributed 6000$ to my traditional IRA and then did a backdoor roth with TDameritrade  To do the conversion 240$ was NC state withheld.  So I recieved 2 different 1099-R forms,  one with distribution of $5670 with box 14 blank (no state tax wittheld) and the other with a distribution$240 box 14 -$240 state tax withheld and state distribution $240.  

Turbotax detected it as 2 different 1099R.  is that right or should I just combine them and put in the state tax withheld and the state distribution as 5760?

Would my Roth contribution still considered to be $6000 or 5760 as far form 8606?

For the $240 distribuition/tax withheld Turbotax asks me what I did with the money?  move it to another retirement account or something else.  would the tax withheld be the something else?

Appreciate the help.

[DanaB27 · Accepted solution]

If you received it as two 1099-Rs then please enter it as two 1099-Rs.

For the $240 you will select "did something else with it". 

You do not enter the conversion as a Roth contributions under deductions and credits. If you made the traditional IRA contribution in 2020 then please follow the steps below:

1. Open your return
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 contributions before this tax year.
9. If you had a basis in the Traditional IRA before then enter the amount.
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 had a prior year basis in the traditional IRA then you will enter this in steps 10 and 11.

1. Open your return 
2. Click on "Search" on the top right and type “1099-R”
3. Click on “Jump to 1099-R”
4. Click "Continue" and enter the information from your 1099-R (for the $5,670)
5. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
6. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
7. On the "Your 1099-R Entries" click "Add another 1099-R" (for the $240)
8. Answer questions until you get to “What Did You Do With The Money” and choose “I did something else”
9. On the "Your 1099-R Entries" screen click "continue" after you entered all 1099-R
10. Answer "yes" to "Any nondeductible Contribution to your IRA?"
11. Answer the questions about the basis and value

[Edited 3/29/2021 | 6:27 am PST

[dmertz]

Ideally you would have opted out of NC tax withholding to allow the entire amount to have been converted to Roth, then made an estimated NC tax payment if needed to avoid a NC tax underpayment penalty.  Unless you substituted other funds for the $240 withheld to complete the conversion of the entire $6,000 distributed.  Not converting the $240 to Roth means that you did not take maximum advantage of the opportunity to add money to your Roth IRA. 

You mentioned that you were doing a backdoor Roth, so if you had a zero balance at the end of 2020 neither the amount converted to Roth nor the amount withheld for taxes will be subject to income tax or to an early-distribution penalty.

You made no Roth contribution.  You made a traditional IRA contribution of $6,000.  The conversion to Roth is a separate transaction, although the taxable amount of the Roth conversion is determined by taking your basis in nondeductible traditional IRA contributions into account.

[Gaizka10]

Thank you.  I appreciate the response.  It was very helpful. 

I used TD ameritrade and it stated the following:

State tax withholding minimum is
4% without Form NC-4P on file.

I didn't have the NC-4P on file so it wouldn't  allow me to submit the transaction so I had to put the 4% to continue. 

Thanks again. 

I

[Gaizka10]

Thank you for your response.  I appreciate the clear explanation and instructions.  Take care.

[Gaizka10]

Update.

I followed the instructions and I get a rejected E-File report.  Turbotax gives me a notification,  

What happened

Duplicate 1099R - Unfortunately, we've noticed your return may have included duplicate Form 1099-R information.

 They were imported automatically from TD ameritrade and I verified all the info is correct.  I tried to delete and re-enter them but still didn't work.    Anyother recourse or should I just mail in the return as Turbotax suggests?  thanks again. 

[dmertz]

During that past week past week (I've seen it mentioned beginning on about March 30, 2020) a number of people have reported the problem where duplicate Forms 1099-R are being inappropriately flagged, even forms that have different codes in box 7.  It seems odd that a check with such a high false positive rate would be allowed to be implemented.  At the moment it seems that filing will require that you mail your tax return.

[macuser_22]

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@dmertz wrote:

During that past week past week (I've seen it mentioned beginning on about March 30, 2020) a number of people have reported the problem where duplicate Forms 1099-R are being inappropriately flagged, even forms that have different codes in box 7.  It seems odd that a check with such a high false positive rate would be allowed to be implemented.  At the moment it seems that filing will require that you mail your tax return.

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I reported this to the MODS but no response so far.     I cited 10-15 threads about this.

Many users have found to adding or subtraction 1  cent to box 1 allows the e-file.

(Because the box 1 amount is rounded to the nearest dollar on the tax return, just be sure that the 1 cent difference does not add or subtract a dollar due to rounding.)

[Gaizka10]

I tried it and it didn't work.  But I appreciate the help.  I just mailed in the returns.  

thanks again.