I am planning on converting a portion of my tax-deferred IRA to a Roth IRA in the next couple of weeks. My understanding is that I have to compete and send form 2210 and schedule AI to avoid a penalty if I do not pay the tax shortly after the conversion. Does turbo-tax online software for 2023 handle this activity? If yes, how do I navigate through the process?
Hi blackoak100,
That is a good question. You must report any amount converted from a traditional to a Roth IRA on your federal income tax return. Unless you choose otherwise, the IRS requires 10% of the conversion amount be withheld for federal income tax purposes. Use Form 2210 to determine the amount of underpaid estimated tax and resulting penalties as well as for requesting a waiver of the penalties.
Conversions must be reported on Form 8606, Part II. Form 1099-R must be entered into TurboTax for the program to populate Form 8606. The way to enter the IRA conversion can be found on the website below.
Hope this answers your question. Feel free to reply if you have any additional questions.