What tax do I have to pay when converting an after tax IRA to a Roth IRA? I also have pre-tax IRAs which I'm not converting.

[ssilvermanchabro]

I read that the taxable portion is calculated using all my IRA accounts, but I am not converting my pre-tax IRA accounts so it doesn't make sense that they should enter into the calculation.

[fanfare]

It does make sense, because all IRAs wherever held are treated as one IRA when you do something like this.

Form 8606 will ask you for the total year-end value of ALL IRAs.

[Critter-3]

Sorry but you don't have a choice ...  ALL your IRA accounts are treated as ONE when making conversions and as such you cannot convert just the after tax contributions. 

[dmertz]

The tax code explicitly requires that all IRAs of an individual be treated as a single IRA with respect to the pro-rata tax calculation because the lawmakers anticipated that individuals would otherwise artificially segregate nondeductible contributions in a separate account to sidestep the pro-rata requirement, something that they did not want to allow because it defeated the intent of the pro-rata calculation.  At least the result is better than what happens when taking a nonperiodic distribution from a nonqualified annuity, which the law requires to come first from the taxable portion of the annuity.

[Hal_Al]

So, how much will be taxable?

It may best be explained by example. Let's say you have a $4,000 balance in all your existing traditional IRAs on 12-31-20 and earlier in 2020 you converted $6000 to Roth. Your balance for the year was $10,000 (the 4000 on hand at year end plus the 6000 you converted). That  balance consist of $3,000 in deductible contributions, $2,000 in previous non-deductible contributions and $5,000 in earnings (interest, dividends & capital gains). Your basis, in all your IRAs, is $2,000. Only 20% of the $6000 conversion ($1200) will be tax free . TurboTax will divide that $2,000 basis by the $10,000 balance  to arrive at the 20% tax free ratio.  $4,800  of the conversion will be taxable.