Rollover/Recharacterization 403b to traditional IRA to Roth IRA question

[dmertz]

You've added $17.5k of taxable income without adding any more tax withholding.  The $2k refund changing to a $2.3k balance due implies a marginal tax rate of about 25% on the Roth conversion.  That's not implausible and would depend on your other taxable income.

Both the code-G and code-2 Forms 1099-R are reportable income and properly get added to your total income but only the code-2 Form 1099-R is taxable income that affects the rest of your tax return.

[BE2]

Thank you for your assistance so far!

A few more questions before I submit.

1. I have placed the 2022 payments I made under “Claim of right repayment over $3K” under “Other Deductible Expenses” under the “Other Deductions and Credits” under the “Deductions and Credits” section. I believe this to be the correct place to input this information based on the following website:  https://ttlc.intuit.com/turbotax-support/en-us/help-article/taxation/claim-right-repayment/L0aW5v3Tp.... Is this correct or is there a more correct location I can place these payments? 
   • I made income as an ensign under the United States Navy that was reported under a W2 form in Box 1, yearly, from 2015-2018
   • I was honorably discharged in 2018 due to a medical condition
   • I am expected to payback all income made and have begun repayment of in 2022
2. As an AZ single individual resident, I anticipate making >$75K in 2023. According to the website below, I need to make estimated payments (See Q1). AZ’s 2023 tax rate is a flat 2.5%. I plan on changing my AZ withholding election to 3% plus additional amounts to be withheld in order to compensate for the 2023 pay periods which have already occurred. I anticipate that this will be enough to cover my AZ tax. Based on Q6 on the same website, I won’t need to do estimated tax payments if I do the above. Is this correct and if yes, is it acceptable not to print out any estimated tax vouchers in AZ? I just want to keep things simple by just increasing the withholding
   • https://www.azdor.gov/sites/default/files/media/PUBLICATION_2013_012.pdf
3. Is it mandatory to enter AZ-only depreciation? On my return it states “We don’t see a deduction for depreciation on your federal return. Do you want to enter AZ-only depreciation?”

[DaveF1006]

No, that is the correct section to enter repayments over $3000.  There is no other place to record that information except here. 

Secondly, if you were required to make estimated tax payments for the year but don't, you may be assessed a penalty for each quarter that you miss a payment.  For an example, if you miss a quarter's payment on a Arizona, AZ can assess a penalty of .5% each month of that quarter. This means that if you missed a full year, you may be charged 2% for the full year on the unpaid balance, even though you had no tax due in the following year. Read this notice from the state of AZ for further details. So no, do not throw away those vouchers.

Keep in mind, if you have no taxes due next year, you will receive the full amount of your estimated taxes you paid throughout the year on your AZ state return for the 2023 tax year.

if you have no federal depreciation to report, disregard AZ-only depreciation.