How to report Roth conversion in Pennsylvania (on PA-40 income tax form)

[bobdylan11111]

I converted $1000 traditional IRA to Roth IRA under age 59.5 for which I received a 1099 R.  According to multiple sources including PA revenue websites, the conversion is NOT taxable even before age 59.5 if you "rolled the entire distribution (100%) into a Roth directly or within 60 days".   However, I am not sure how I can report the conversion.  Pennsylvania does not have a form that is equivalent to federal form 8606 where you can report the conversion.  I also do not see anything on their state income tax form (PA-40) where you can report the conversion.  Could any tax experts in Pennsylvania give any guidance?  

[DanaB27]

Yes, the conversion of a traditional IRA to a Roth IRA is generally not taxable in PA (PA DOR).

TurboTax should automatically not include the amount in your gross compensation on line 1a.  You can also check your Gross compensation Worksheet.

If you have the conversion included in your gross compensation then it would be helpful to have a TurboTax ".tax2021" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Download: 

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"
3. Click "Send"
4. The pop-up will have a token number
5. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

[bobdylan11111]

Thank you so much for your answer.   I can make the amount not included in the gross compensation on line 1a.

However, I am still not sure about how PA dept. of revenue will know the amount was not included on line 1a due to Roth IRA conversion since 1099 R (which may need to be submitted along with the return) only shows the distribution amount and other information, but not whether the amount was directly converted into Roth.  Is there some other document(s) that need to be submitted along with the return such as federal 8606 (which shows Roth conversion) or some other PA or federal document(s) that I am not aware of?

Thank you.

[RaifH]

From the PA-40 instructions:

For E-Filed Returns: If you file your PA-40 electronically, you are not required to submit an actual copy of your W-2, 1099-R, 1099-MISC or 1099-NEC forms unless certain conditions exist with respect to those forms. For Forms 1099- MISC, 1099-NEC and 1099-R, you are only required to submit actual copies of these forms if there is PA tax withholding reported on the forms.

There are no supplemental forms to derive the income reported on Line 1a of PA-40. The worksheets that TurboTax produces are for your information only and are not submitted with your state return. The attached federal return will have all the information about the conversion. 

[bobdylan11111]

I use the software but print and mail the returns.  So in this case, when I am mailing the state tax return, PA-40, what other documents/forms besides 1099R need to be submitted along with the return?

Thanks.

[ErnieS0]

Here's what to include with your Pennsylvania income tax return:
 

Arrange your documents in the following order when submitting your 2021 PA tax return: 
 

• Original PA-40. Do not mail a photocopy of your PA-40 or a copy of your electronic PA tax return.
   
• Federal Forms, W-2, 1099-R, 1099-MISC, 1099-NEC. Photocopies of your Form(s) W-2 (be sure the information is legible), or your actual Form(s) W-2. 
  
  Include a statement to list and total your other taxable compensation. You must submit photocopies of your Form(s) 1099-R, 1099-MISC, 1099-NEC and other statements that show other compensation and any PA tax withheld. 
  
  NOTE: Do not include copies of Form(s) 1099-DIV, and 1099-INT, unless the forms show PA income tax withheld.
   
• PA Schedule OC, and the required supporting documents when claiming any of the restricted tax credits that PA law allows.
   
• PA Schedule(s) RK-1, PA Schedule(s) NRK-1. If you did not receive PA schedules, then submit federal Schedule(s) K-1.
   
• PA Schedule(s) G-L. If you are claiming a resident credit for taxes paid to other states, include each schedule followed by any required supporting documents for the schedule.
   
• All other required PA schedules and forms, including any additional sheets you prepared.
  
  IMPORTANT: Please include your name(s), Social Security number(s), tax year, and a brief line reference to the PA-40 or PA-40 schedule for any additional sheets you include with your return. 
   
• All other required documents, including federal schedules (where the instructions allow the use of federal schedules), that explain the information you entered.
   
• Using PA Payment Voucher (Form PA-40 V) and payment

Edited 03/26/21 | 09:40 PDT to change 2020 to 2021 in "Arrange your documents in the following order when submitting your 2021 PA tax return"