topic Re: MAGI calculation for ROTH Contribution in Get your taxes done using TurboTax

MAGI calculation for ROTH Contribution

shmc — Tue, 10 Feb 2026 11:10:51 GMT

Line 1 of the Roth IRA Contribution Limit Worksheet is incorrectly calculating MAGI... it appears to be subtracting inherited IRA distributions (in addition to IRA Roth conversions). Why ?

also affects the Traditional IRA deduction, inherited IRA distributions are being subtracted from the MAGI caclculation in error.

Re: MAGI calculation for ROTH Contribution

dmertz — Tue, 20 Feb 2024 21:23:47 GMT

Wow! You are right! Very observant! My own tax return shows the same problem.

Perhaps @BillM223 can help in reporting this bug.

I'll do a bit of research to see how long the bug has been present in TurboTax, but I suspect it's been there for a LONG time since it's not something that one would readily notice. Of course somebody who did not actually make an excess Roth IRA contribution would not care.

Re: MAGI calculation for ROTH Contribution

shmc — Tue, 20 Feb 2024 21:37:28 GMT

it's been there since at least 2021, an error in the taxpayer's favor since it lowers the MAGI more than it should.

Re: MAGI calculation for ROTH Contribution

dmertz — Tue, 20 Feb 2024 21:53:44 GMT

Not as log ago as I expected. This bug was introduced with an update to 2021 TurboTax and remains present in 2022 and 2023 TurboTax. It was not present in 2021 TurboTax on 3/19/2022 when I filed but is present in the last update to 2021 TurboTax.

Re: MAGI calculation for ROTH Contribution

dmertz — Tue, 20 Feb 2024 21:59:35 GMT

The error is not exactly in the taxpayer's favor since, if TurboTax fails to recognize an actually excess contribution due to this bug, the excess-contribution penalties can accumulate without the taxpayer's knowledge. At least the SECURE 2.0 Act has created a statute of limitations for the IRS to be able to assess excess-contribution penalties, but the IRS has not yet provided guidance on how that statute of limitations will be applied.

Re: MAGI calculation for ROTH Contribution

BillM223 — Wed, 21 Feb 2024 19:52:17 GMT

@dmertz

Thanks for the note. Any additional information you can provide here (or through other channels) would be appreciated.

Re: MAGI calculation for ROTH Contribution

shmc — Wed, 21 Feb 2024 21:00:54 GMT

The same is happening on Line 12 of the IRA Deduction Worksheet. I am missing something when it comes to how inherited IRA distributions are treated.

Re: MAGI calculation for ROTH Contribution

BillM223 — Wed, 21 Feb 2024 21:24:07 GMT

@dmertz it has been suggested to me that I get a sanitized return from you of a test case that acts the way you describe. Can you do that?

Of course, you don't need to do any of the sanitizing; the TurboTax sanitation process while creating a token works very well...sometimes too well.

Let me know if you can do this for us.

Online

Log into your TurboTax Online tax return
On the left, click on Tax Tools
Under Tax Tools, click on Tools
In Tools Center, click on Share my File with Agent
TurboTax will give you a “token”, a 7-digit number
Post the token number in this thread
Be sure to add to that post “@” “billm223” (without the space in between) so that I will be notified

Desktop

Open your return in the desktop product
Look along the top and click on Online
Click on Send Tax File to Agent
TurboTax will give you a “token”, a 7-digit number
Post the token number in this thread
Be sure to add to that post “@” “billm223” (without the space in between) so that I will be notified

Re: MAGI calculation for ROTH Contribution

dmertz — Wed, 21 Feb 2024 23:07:16 GMT

In trying to create a stripped-down version of a tax return, so far I have not been able to reproduce the problem that is shown in my personal tax return by building a new tax return, likely due to some interdependency with something that should be unrelated. My personal tax return has more in it than I want to include in even a sanitized submission, so it will take me some time to figure out the interdependency and make the submission. I think it has something to do with other Forms 1099-R that are present because if I delete those the symptom disappears. I'll make the submission when I have something suitable.

Re: MAGI calculation for ROTH Contribution

dmertz — Thu, 22 Feb 2024 00:03:14 GMT

OK, I got it. Token 1190388.

In this test file, the MAGI shown on the Roth IRA Contribution Limit Worksheet should be $250,000, not $50,000.

Recreating the problem required including a Form 1099-R for a Roth conversion from a traditional IRA and having basis in nondeductible traditional IRA contributions. Got lucky in being able to initially see this symptom since my own personal tax return includes the necessary elements.

Re: MAGI calculation for ROTH Contribution

dmertz — Wed, 21 Feb 2024 23:51:11 GMT

@BillM223 , tagging you just to make sure.

Re: MAGI calculation for ROTH Contribution

BillM223 — Wed, 21 Feb 2024 23:55:50 GMT

@dmertz

Thanks for the token.

Re: MAGI calculation for ROTH Contribution

shmc — Wed, 21 Feb 2024 23:56:11 GMT

@BillM223 I also uploaded a version of my file with both a ROTH IRA contribution and a Traditional IRA contribution so you can see both MAGI's on the worksheets . token number 1190456

Re: MAGI calculation for ROTH Contribution

BillM223 — Wed, 21 Feb 2024 23:58:29 GMT

Thanks @shmc

Re: MAGI calculation for ROTH Contribution

dmertz — Thu, 22 Feb 2024 01:33:12 GMT

Not realizing the interdependencies, my previous testing to determine when this bug got introduced was incomplete. It now appears to me that it was introduced in 2020 TurboTax.

Re: MAGI calculation for ROTH Contribution

BillM223 — Thu, 22 Feb 2024 01:38:19 GMT

@dmertz You are a fine archaeologist!

Re: MAGI calculation for ROTH Contribution

shmc — Thu, 22 Feb 2024 01:49:46 GMT

I agree,... I don't see it in 2018 or 2019.

Re: MAGI calculation for ROTH Contribution

BillM223 — Thu, 22 Feb 2024 03:15:13 GMT

@dmertz

@shmc

dmertz, you are correct about how this is not an advantage to the taxpayer. Based on what you said, I overrode the line one on the Worksheet on your test return, changing the 50,000 to 250,000.

Sure enough, the 6,500 Roth IRA contribution was declared to be in excess, which triggered form 5329 and a penalty of $390 on line 25, which carries back to line 8 on Schedule 2 (1040).

Re: MAGI calculation for ROTH Contribution

shmc — Thu, 22 Feb 2024 12:12:02 GMT

@BillM223 What's the next step in getting this corrected ?

Re: MAGI calculation for ROTH Contribution

BillM223 — Thu, 22 Feb 2024 17:00:09 GMT

I have to write up the issue (my thanks to you and @dmertz for creating the test cases), to be submitted to the team to reproduce the behavior and authorize a correction. Unfortunately, we in the Community have no input once we have done this, therefore, I cannot give you an estimate on when a correction, if any, will be available.