TT Premier not handling IRA to ROTH Conversions well. :( I think it has correctly made my Conversion a non-taxable event, but on the 1099-R Worksheet, it is showing the total distribution on line 5, which is the amount NOT converted to ROTH. Since ALL my gross amount was converted to ROTH should I zero out line 5 and put that amount on line 4 instead? Why can't TT figure this out? This should be a VERY EASY and COMMON transaction (IRA to ROTH Conversion).
I think that you mean lines 4 and 5 of the Form 1099-R Summary. TurboTax has nothing called a 1099-R "Worksheet".
The result you presently are seeing implies that you did not indicate that any of the gross amount was rolled over to a Roth IRA. Go back and edit the Form 1099-R reporting the distribution from the traditional IRA. Be sure to indicate that you moved the money to another retirement account and the you converted the entire amount to Roth.
Great, and WHERE do I do that? And yes, I am reading '1099-R Worksheet' in my Turbotax Premier and I'm guessing this is the designation given to this form by the IRS.
It seems that you might be making entries in forms mode. Making entries in forms mode, particularly on TurboTax's 1099-R form, is prone to error. Errors resulting from entries in forms mode are not covered under TurboTax's accuracy guarantee.
Make the 1099-R entries only in step-by-step mode under Wages & Income -> Retirement Plans and Social Security -> IRA, 401(k), Pension Plan Withdrawals (1099-R) and answer the follow-up questions. I suggest going there, deleting the existing Form 1099-R and reentering it.
I tried to do this for TY 2022 on TT, 20K conversion from IRA to Roth, with 20% withholding, and ended up with a $1200 penalty (6%), apparently because I called it a contribution, not a conversion, in the TT algorithm, by mistake, but I am still not sure how exactly to do it all correctly next year.
You have to fix this error with an amended 2022 tax return.
you will be paying 6% every year until you take care of it.
Thanks for the reply.
I did file an amended return, but am still not sure I know how to do it correctly next year.
A backdoor Roth IRA allows you to get around income limits by converting a traditional IRA into a Roth IRA. Contributing directly to a Roth IRA is restricted if your income is beyond certain limits, but there are no income limits for conversions.
You’ll receive a Form 1099-R with code 2 in box 7 (or code 7 if your age is over 59 ½) in the year you make your Roth conversion. You should report your conversion for the year you receive this 1099-R:
How to Report a 2022 Backdoor IRA to Roth in TurboTax