Backdoor Roth IRA PLUS Additional Contribution Traditional Conversion to Roth IRA

[kaaraa69]

This year I did the Backdoor Roth IRA for both my wife and myself; $7000 each, as we are both over age 55.

The money is deposited in a Traditional IRA at our bank, and 100% is converted to both our Roth IRAs, and the Balance of both our Traditional IRAs is ZERO every year on 31 DEC, so the Pro Rata Rule does not affect this action.

Additionally, my wife rolled over $100,000 from the 401K from her work, into this same Traditional IRA at the Bank. This money was converted to her Roth IRA along with her $7000 contribution, as mentioned above.

For some reason, Turbo Tax is NOT treating the extra  $100,000 as taxable income. 

I have entered VERBATIM the 3 1099-Rs that pertain to this eventual conversion to a Roth IRA.

Repeated "Smart Checks" find "No Errors", but I know something is wrong, and I have been going through the questions step by step to fix this.

Any clues on what I am doing wrong?

[macuser_22]

You should have 1 1099-R for the 401(k) rollover to Traditional IRA.

One 1099-R for your distribution/conversion.

And one for her distribution/conversion.

Is her 1099-R box 1 and 2a amount $107,000?

IRA/SEP/SIMPLE box checked?

What code is in box 7?

Are you using the Online version or CD/download version of TurboTax?

[kaaraa69]

Correct on the 3 1009-Rs

2 was in block 7

and IRA/SEP/SIMPLE block was checked

[kaaraa69]

Also $107,000 was in Block 1 and 2b

[kaaraa69]

I am using the  CD/download version of TurboTax

[macuser_22]

You should get a screen similar to this and enter the amount converted in the bottom box.

That should put that on the 1040 form line 4b as the taxable amount.

[macuser_22]

For the non-deductive basis:

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2020.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14.

NOTE: If there is an * next to line 15 then 6-14 will be blank and the calculations will be on the "Taxable IRA Distributions worksheet instead.

[kaaraa69]

Yes, I've done that, to no effect.

I DID enter the $100,000 as

"Excess Contribution Withdrawn Before Due Date of Your Return" on the Contributions Withdrawn Before Due Date page, and the taxable amount increased.

[kaaraa69]

The Federal Tax Due increased.

It seems to work, But I don't know if this is correct.

[kaaraa69]

When I got to the "You Currently Have a Penalty" Page

for the "excess Contribution of $100,000" TurboTax is saying that there is a 6% penalty.

To solve the Federal Tax Due problem 

AND the "You currently have a Penalty" problem can I put the $100,000 in the "Excess Contribution Withdrawn Before Due Date of your Return" box?? and be correct?

[macuser_22]

The $100,000 is NOT a contribution.  It is a rollover/conversion and is ONLY entered with the 1099-R as I said above.

Assuming that the  total 2020 years end balance in the Traditional IRA was zero, this is what it should look like.

[kaaraa69]

The problem....I THINK....is that the 

1099-R Block 7 is "2"  on "7" on both the "Conversion 1099-Rs"

The 3rd 1009-R is the Rollover 1099-R and has the letter "G" in Block 7

Could it be that the 1009-R is incorrect?" 

(Sorry to be a pain) 

[kaaraa69]

1099-R, Block 7 is "2" 

NOT "7" on both the "Conversion 1099-Rs"