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zkuangyi
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Turbotax incorrectly include Roth IRA conversion into NJ taxable income

I need help on the backdoor Roth IRA tax issue if this also happened to anyone else - i made 6000 after tax contribution to traditional IRA and immediately convert to roth IRA. I received 1099-R from the bank and it needs to be reported. Turbotax understand that this is not taxable by the federal and calculates it correctly for federal. however, when it comes to New Jersey tax, it counts the conversion full amount into taxable income no matter what i do. i searched online and NJ treasury official website (https://www.state.nj.us/treasury/taxation/pdf/pubs/tgi-ee/git2.pdf) clearly states below:

If you qualify to convert an existing IRA to a Roth IRA for federal tax purposes, you also qualify for New Jersey tax purposes, even if your New Jersey taxable income is more than the federal limitations.

You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. In most cases, your contributions to a traditional IRA were previously taxed. Only the earnings are taxable to New Jersey in the year you roll over the funds. However, any amounts you roll over from a traditional IRA to a Roth IRA that were not previously taxed by New Jersey - such as a rollover distribution to an IRA from an employer’s 401(k) plan must be included in your New Jersey income in the year the funds are withdrawn from the traditional IRA
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3 Replies

Turbotax incorrectly include Roth IRA conversion into NJ taxable income

" no matter what i do."

 

did you go through the step-by-step interview for NJ retirement distributions?

zkuangyi
New Member

Turbotax incorrectly include Roth IRA conversion into NJ taxable income

Thanks for the inspiration! I just went through the NJ income process again and had a second thought about this question below - initially i thought this refers to the box 16 on the 1099-R which is blank so i just put 0. because it is under the title 'enter the details about your Roth conversion".  now i understand this refers to the distribution originally made to the traditional IRA. i updated it to 6000 and that fixed the NJ tax.

 

"Contributions Related to This Distribution Previously Taxed by New Jersey"

Turbotax incorrectly include Roth IRA conversion into NJ taxable income

I have this same problem an after-tax Roth conversion on my MA tax form.  This is the SECOND calculation error that I found in TT 2021 Premier for Mac!!!!!

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