Why is there a penalty on my roth conversion? converted IRA 10,602 to existing Roth; penalty for excess contributions. Yearend balance 16152. Penalty is $246.

[macuser_22]

How did you enter it?   A Roth conversation is reported on a 1099-R as a distribution, not a a contribution.

Enter a 1099-R  here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu  (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type:  Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[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.]

[carolholz]

That is how I did it. I just deleted for form and re entered with same penalty.

[macuser_22]

Where do you see the penalty - what form and line?

[VolvoGirl]

Did you also enter it under Deductions & Credits as a ROTH IRA contribution?  That is only for new contributions not conversions.  Only enter the 1099R.  What code is in box 7?

[carolholz]

Form 5329 line 25. I did NOT enter it under deductions and credits as a Roth IRA. Box 7 diatribe code is 7.

[carolholz]

Distribution code not diatribe.

[macuser_22]

What line 18-23 is there an entry on?

[carolholz]

line 23 - 4,102.  Conversion amount was 10,602.

[carolholz]

When I deleted the 1099R to restart the process, the form 5329 did not clear the amount even though there was no IRA/conversion information in the system.

[macuser_22]

the 5329 line 23 comes from excess *contributions* from the IRA contribution interview.

A 1099-R reporting a Traditional IRA to Roth conversion is not a new contribution and does not get entered in the IRA contribution section.

ONLY new money contributed to an IRA is entered in the IRA contribution section.

Check what was entered here:
Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR  Use the "Tools" menu  (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

[carolholz]

Thanks, found it!

[macuser_22 · Accepted solution]

Solved in comments.