1099-R State Distribution Taxes Withheld

[taxprepny99]

I've received my 1099-R for tax year 2024. I performed an in plan Roth conversion from my tIRA to my Roth IRA and my tIRA only had after-tax contributions.

On the 1099-R, box 14 and box 16 have zero state taxes witheld and zero state distribution. It is now asking where did the distribution source occur? Listed options are state/federal government, city/state, other pensions, none of the above (select for deferred compensation 457b plan). I selected none of the above even though the source didn't come from deferred compensation. Then it displays the total amount converted that I made in the state distribution amount field (box 16) even though on my 1099-R it displays blank for state distribution. Which do I enter where it says taxes distribution? Do I enter the value 0 listed on my 1099-R form or the distribution amount that I converted over in turbotax? 

Thank you for your support!

[AmyC · Accepted solution]

1. The federal and state will tax any gain made while in the traditional IRA. For your state box, it could be zero or some other number. Whatever is the actual gain is the taxable amount for state income.

2. Yes, moved to retirement account

3. If you moved part of the money and kept part, then that is what you did. Entering the amount you converted is correct.

4. Yes, it sounds like you did a great job covering the form. It should have asked about the basis or known from your 8606. Just double check that the basis is accounted for so you are not being taxed on the same income again. You should have been filing form 8606 each year with the basis in the traditional IRA accounted for there.

[taxprepny99]

Hi @AmyC ! Thank you for your response. I have been tracking my basis of nondeductibles on my 8606. I did move all of the traditional ira to Roth IRA. The state tax distribution automatically changed to the full amount I converted.

Sorry for asking again, but do I just keep the value of $0 in this section when it asks about state taxes distribution, since that is what is displayed on my 1099-R or the full amount I converted to my Roth IRA? 

[AmyC · Accepted solution]

The number should be (total distribution - basis). If that number is zero, then it is zero. If you had any gains, then it would have some value. You will need to adjust the amount. However, it should be the same as the federal, the same adjustment to take out the basis from the distribution. Depending on your state, it may not be relevant. Some state use the federal AGI while others build it from the forms you enter. If your state starts with the federal AGI, try leaving it blank.

[taxprepny99 · Accepted solution]

Thank you again, @AmyC for your timely response! I appreciate all of your advice and guidance!