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Taxable amount for non-deductible Trad IRA to Roth IRA conversion

So just like every year, I contribute to a non-deductible Trad IRA, and then a few days later, I convert it to a Roth IRA (backdoor).

In Jan 2022, I added $6000 to non-ded TIRA (in a mutual fund), and then a few months later (but before end of 2022), I converted $6152 (incl. $152 of earnings) to Roth IRA (same mutual fund). When I did my taxes in Turbo Tax, it correctly showed:
IRA Distributions - nontaxable: $6000
IRA Distributions - taxable: $152

 

BUT for 2023, when I did the same thing, Turbo Tax is calculating my taxable amount differently. In 2023, I added $6500 (as cash), and then converted $6502 (incl. $2 of earnings) to Roth IRA few days later as cash. And then, in Roth IRA, I added it to a mutual fund. Turbo Tax shows:
IRA Distributions - nontaxable: $3250
IRA Distributions - taxable: $3252

 

Why is that? The only thing different in 2022 versus 2023 was converting to Roth when the money was in a mutual fund versus cash. Are there other tax situations in 2023 that could have made Turbo Tax not count $6500 as non-taxable IRA Distributions?

 

2023 1099-R has $6501.79 in box 1 (Gross distribution) and the same amount in 2a (Taxable amount). Both boxes in 2b are checked. Box 7 (Distribution code is 2, and IRA / SEP / SIMPLE has a X.

2022 1099-R was identical except it had $6151.86 in box 1 (Gross distribution) and the same amount in 2a (Taxable amount). Both boxes in 2b were checked. Box 7 (Distribution code was2, and IRA / SEP / SIMPLE had a X.

 

BTW, I noticed there was $2.69 sitting in my non-deduc TIRA on 12/31/23 even after I did my 2023 conversion in October 2023.

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1 Best answer

Accepted Solutions
dmertz
Level 15

Taxable amount for non-deductible Trad IRA to Roth IRA conversion

The result suggests that you have entered your year-end value in traditional IRAs as being $6,500 or so rather than $3.

View solution in original post

4 Replies
dmertz
Level 15

Taxable amount for non-deductible Trad IRA to Roth IRA conversion

The result suggests that you have entered your year-end value in traditional IRAs as being $6,500 or so rather than $3.

Taxable amount for non-deductible Trad IRA to Roth IRA conversion

Thanks. This which would be on which Turbo Tax screen? I have the Deluxe version installed on Windows.

dmertz
Level 15

Taxable amount for non-deductible Trad IRA to Roth IRA conversion

TurboTax asks for your year-end balance in traditional IRAs after you click the Continue button on the page that lists the Forms 1099-R that you have entered.

Taxable amount for non-deductible Trad IRA to Roth IRA conversion

Yu, that fixed it. Thanks.

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