1099R Reporting from a ROTH Conversion?

[lzxray]

I have a couple 1099R questions specific to a Roth Conversion made last year.  So, from my traditional IRA, I rolled over $40K.  Of which, $9,6K in federal and $1,6K state taxes were withheld.  In my 1099R, I have $28,8K listed in both box 1 (gross distribution) and box 2 (taxable amount).  Box 2b  (taxable amount not determined) is checked.  Box 4 (Fed. Income tax withheld) has zero listed.  Box 7 (distribution codes(s) listed is “2” with IRA/SEP/SIMPLE box checked.  A couple questions:  1). Am I being taxed again on the net amount ($28,8K) converted from Roth?,  and 2) Is there a way to account for taxes already withheld when the ROTH conversion is made? Thank you!

[dmertz · Accepted solution]

Based on what you have said, it appears that you are missing a code-1 Form 1099-R.  You should have two Forms 1099-R, one with code 2 that reports a Roth conversion of $28,800 (which you have mentioned having) and a separate Form 1099-R that has $11,200 in boxes 1 and 2a, box 2b taxable amount not determined marked, code 1 in box 7 and the IRA/SEP/SIMPLE box marked.  This $11,200 that was withheld for taxes is includible in taxable income and is subject to a 10% early-distribution penalty unless you substituted $11,200 of other funds to complete a rollover or conversion of this portion of your distribution from the traditional IRA.

[lzxray]

dmertz,

Many thanks!  You are spot on...there indeed are 2 - 1099R Forms which I failed to download both.  The 2nd 1099R has all the fields filled out as you have listed.  Again, I appreciate your prompt reply and guidance!

[micisner]

Along this same question. When entering into Turbotax the 1099-R with tax withholding; Tell us if you moved the money through a rollover or conversion? 

Also the question of Did you roll over the gross amount of $12,000.00 (Box 1) to another retirement account? What should this answer be if this is the tax witheld on the conversion of $50,000. 

Please help on this answer. I am getting confused as the $12,000 was withheld from the 50k conversion. 

[DaveF1006]

No. I think there's some confusion here. The distribution was $50,000 and the tax withheld is $12,000. ‌$50,000 is reported in Box 1and 2A and the income tax withheld should be reported in Box 4 of your 1099R.

What program is asking if you rolled over the $50,000 to another retirement account or if you did something else with it. If you roll over the distribution to another retirement account within 60 days, you are not be taxed on the distribution. If you just cashed the money and put it into your bank account, then the amount of the distribution is taxable.

Regarding the $12,000 withheld for income tax withheld, this will be applied to the tax liability generated in your return  and give you a credit.  This will result in either a bigger refund  lessening the taxes. owed. Once you put this information in Box 4 of your 1099R, TurboTax will use this withholding as a credit. This will make your tax liability less.

[dmertz]

@micisner , do you have one Form 1099-R or two?

What are the codes in box 7 of the Form(s) 1099-R?

Is the IRA/SEP/SIMPLE box marked?

[micisner]

I have 2 1099-R

the code for the $12k is 1 in Box 7

the code for the $38k is 2 

both 1099-R have IRA/Sep/Simple checked

[VolvoGirl]

See micisner’s other post

https://ttlc.intuit.com/community/taxes/discussion/1099-r-tax-withheld/00/3562915 

[VolvoGirl]

@micisner   Did you see my answer on your other post?  Didn’t it make sense to you?  How much actually got into the ROTH IRA?  50k or just 38k?

[dmertz]

VolvoGirl, thanks for the link to the other post.

In this case, unless other funds were substituted for the $12,000 withheld for taxes so as to convert the $12,000 to Roth within 60 days of this distribution, the $12,000 is subject to an early-distribution penalty and the $12,000 was not converted to Roth.

All of the $38,000 shown on the other Form 1099-R was converted to Roth.