1099r IRA to Roth conversion, need help, possible error

Forum|Forum|4 years ago
February 12, 2022
3 replies
19 views

I am struggling. I did a conversion from IRA to Roth. At the time I know I paid some taxes on it. I was mailed two 1099r's, one for the amount that went into the Roth and one for the taxes. When I input them both (and I've checked them a million times I know it is correct), Turbo Tax flags the one that is the taxes paid as a withdrawal and says I have to pay penalties. The tax code in box 7 is one, which is correct.

I cannot for the life of me figure out why it isn't understanding. One possibility, it is not letting me enter that 1099 as is, when I input the exact amounts withheld, which when state and federal are added together are the exact amt of box 1, I get an error stating "State tax shouldn't be greater than gross distribution." I have to lower it by $.01 to move to the next screen, which then I guess makes it look like I withdrew a penny? I don't know that might not be the issue, it is just the only thing I can think of at this point. If anyone knows what to do, I'd appreciate any help I am not good at this stuff. Thank you.

macuser_22

Alumni - Champ

Why 2 1099-R's? Is one a corrected 1099-R?

What code is in box 7 or each? Is box 1 and 2a the same. Is the IRA box checked? What is in box 4? Did you have two distributions?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

trimblelc1Author

Level 2

I had one IRA account, converted the full amount into a Roth. Was sent two 1099r's for that one conversion.

The first 1099r is for the money that went into the Roth, 1 and 2a are the same, and it is box 7 code 2. This one shows no taxes paid (the taxes that were paid are the second 1099r). This one seems to be going in correctly.

On the second 1099r, The entire amount of box 1 was withheld for taxes on the conversion. Box 1 and 2a are the same. Box 7 is code 1. Box 4 and 14 add exactly up to the amt of box 1, but it will not let me enter them that way, I get the error.

dmertz

Level 15

The result that you are getting is correct. The amount withheld for taxes is an amount distributed but not converted and TurboTax is correctly treating it as a distribution subject to tax and early-distribution penalty.

The amount converted, reported on the Form 1099-R that has code 2, is taxable but not subject to penalty.

The error that you are getting regarding about state tax exceeding the amount of the distribution is a bug in TurboTax online (not in the CD/download version). The workaround in the online version is to reduce either of the tax withholding amounts by $0.01.