Roth IRA conversion not taxable?

10 replies
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I converted a small amount of my fully deductible IRA to my Roth IRA and after complete and accurate tax-form reporting to Turbo Tax I'm being told additional tax is not due. Under what circumstances would this type of conversion NOT be taxable? I hope I truly qualify for an exemption but I am skeptical.

TurboTax Deluxe Online

MinhT1

Alumni - Intuit

A conversion to a Roth IRA results in taxation of any untaxed amounts in the traditional IRA.

If all your contributions to your traditional IRA were deductible, then the conversion to a Roth IRA will result in taxation of the amount converted.

Please review your entries in TurboTax and make sure that you answer correctly all the questions,

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rlp2451

Level 2

I am discovering the same thing. Under the Line 7 Distribution Code, after you enter the code number (7), TTax asks if the IRA/SEP/Simple box is checked. When you put an "X" in the box (as it shows on the 1099-B), TTax re-calculates the taxes due and shows it as non-taxable.

dmertz

Level 15

The "additional tax" TurboTax is referring to is the excise tax for the otherwise early distribution from the traditional IRA. Since you converted the entire amount to a Roth IRA, there is no early-distribution penalty.

You should see the entire amount of the conversion included on Form 1040 line 15b or Form 1040A line 11b.