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Level 2
posted Mar 31, 2020 9:07:06 PM

ROTH IRA Conversion

In 2019, I converted some significant amount from traditional IRA to ROTH IRA and received 1099-R where  the box 7 is checked with # 2 — Early distribution, exception applies (under age 591⁄2).  I am 58 years old.  I believe this amount is  taxable without early withdrawal penalty of 10%.  However, when I input the information in 1099-R in Turbotax which I downloaded and installed in my desktop, it says that I do not owe any extra tax on this money based on the entry for box 7 on 1099-R, meaning that there is no penalty as well as no regular tax on the converted amount.

 

For 1099-R, box 1 (gross distribution) and box 2a (taxable amount) has the same amount and box 2b is checked in the box titled 'taxable amount not determined'.

 

How can I correct the situation in Turbotax so that the converted amount may be included in the AGI?  Or, perhaps, is my understanding of tax rules wrong and in fact I do not have to pay tax for this amount? 

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1 Best answer
Level 15
Mar 31, 2020 9:23:35 PM

The "additional tax" that TurboTax says you don't owe is only the 10% early-distribution penalty, not the income tax.  (The "penalty" is actually a excise tax.)  You'll see the taxable income resulting from this transaction appear on Form 1040 line 4b.

1 Replies
Level 15
Mar 31, 2020 9:23:35 PM

The "additional tax" that TurboTax says you don't owe is only the 10% early-distribution penalty, not the income tax.  (The "penalty" is actually a excise tax.)  You'll see the taxable income resulting from this transaction appear on Form 1040 line 4b.