Being taxed on post-tax contribution to Roth IRA

[nbhardwaj]

Hi,

In March 2024, by mistake, I contributed $6500 from my bank account (post-tax money) to my Roth IRA. That money was $6713 in Nov 2024, which I moved to my brokerage account. I got a 1099-R indicating $213 as taxable income, on which TurboTax calculated a federal tax of $21. This was my first year of making this mistake and moving the money out from the Roth account. I am also planning to make a contribution of $7000 for backdoor Roth conversion for 2024. Now when I'm doing my New Jersey taxes, this is how I answered the following questions under "IRA Information"
1. Tell us if this was the first withdrawal from this IRA? Yes

2. total of all IRA previously taxed: $6500

3. Value of all IRS on 12/31/2024: $42,068 (the value of my traditional IRA on Dec 31 2024)

4. IRA Contributions made for 2024 between 1/1/2025 and 4/15/2025: 7000

But in the next screen, it lists an amount of $5932 for New Jersey taxable pension. I believe TurboTax is taxing me on the $6500 and not $213. In the forms at least $5932 as taxable pension and $781 as excluded pension (sum is $6713). Can anyone pls tell me how do I make $213 as my taxable income (and not 6500) from this entire contribution? Do I need to change anything manually?

Moreover, increasing the amount in all IRA (traditional IRA) also increases the NJ taxes which it should not.

Thank you so much!

[nbhardwaj]

Hi, would anybody be able to help with the above issue? Basically, when I put $6500 as post-tax contribution, TurboTax still lists a chunk of that as taxable pension. So it's taxing me on the $6713 instead of the gains of $213. 
Thanks so much in advance.

[fanfare]

1. Tell us if this was the first withdrawal from this IRA? Yes

2. total of all IRA previously taxed: $6500

3. Value of all IRS on 12/31/2024: $42,068 (the value of my traditional IRA on Dec 31 2024)

4. IRA Contributions made for 2024 between 1/1/2025 and 4/15/2025: 7000

These question do not apply to a Roth IRA.

I don't know why TurboTax is asking those questions.

you need to circumvent or defeat these questions, perhaps by entering -0-.

The NJ taxable amount is the same as the Federal taxable amount

@nbhardwaj 

[fanfare]

Did you mark the IRA/SEP/SIMPLE box?

That would be wrong for a Roth distribution.

@nbhardwaj 

[nbhardwaj]

Thanks, @fanfare 
But I can't help with these questions coming up: they come up right after the previous screen where TurboTax lists my post-tax contribution of $6500 to my Roth IRA (because I uploaded from 1099-R). So I have to say yes that this was the first time withdrawing. Also, for the 2nd question, if I put $0 in my post-Tax contribution instead of $6500, the taxes go even higher because then it lists the full $6713 as taxable pension on the next screen. And no, I did not check anywhere with SEPA/simple.

I need help in TurboTax not listing the $6500 (or a large part of it) as my taxable pension. How can I stop it from doing that or manually override it? Thank you so much

[fanfare]

because I uploaded from 1099-R)."

your 1099 shows a distribution, not a contribution

If you remove contribution plus earnings" It is as if that contribution never happened, except for the allocable earnings, if any.

therefore your contribution was -0- not  $7000, your distribution is $7,000 but that is a bookkeeping record reuqired by IRS.

Make your distribution 213 and taxable amount 213  and you should get that amount on 1040 Line 4b alone.

Answer to Q4 should definitely be zero by your original post first sentence.

=====

If you can't make it work, you can override and you will have to mail in your NJ tax return.

TurboTax Online does not allow override; you didn't say which version you are using.

@nbhardwaj 

[fanfare]

"4. IRA Contributions made for 2024 between 1/1/2025 and 4/15/2025: 7000"

This can be true if that's what you are doing in 2025 before April 15th,

However it should not be relevant because these questions don't apply to a Roth IRA

@nbhardwaj