Filing 2019 Conversion from IRA to Roth IRA when backdoor doesn't work

[Cath1een]

Tried the backdoor conversion but it just adds the taxes we've already paid/had deducted onto our 1099-R "income."  I know this is not correct so how do we proceed?  I need some way to input the conversion amount and then input the federal and state taxes already paid when we made the conversion.  Help please.  

[MarilynG1]

You could Delete your 1099-R entry and re-enter it to see if this resolves your issue. 

This link has instructions on How to Enter a Roth Back Door Contribution. 

Contact Phone Support if the issue persists. 

[Cath1een]

Hello again.  Here is some additional information and some questions that may help with my issue.

The Backdoor sequence doesn't give any links or connections to Form 8606.  How do I get to it because unless I can input the amount that was converted from IRA to Roth IRA the whole tax calculation will be incomplete or inaccurate. 

Also, we have the exact amounts of taxes we had withheld from the Roth IRA Conversation - both for Federal and State returns.  Where do we input that information AND how do we get to those forms within TurboTax so that the calculations are done correctly?

We have already inputted other 1099-Rs, Social Security, etc. but until we can figure out how to input the amount of the Roth IRA conversion AND the Federal and State taxes we've already paid, we're stuck with a product that won't allow us to finish our taxes via TurboTax. 

Thanks - hope to hear from you soon.  Cath1een

[AnnetteB6]

It would help if you described in detail what you did. 

Did you simply take a Tradtional IRA account and convert it to a Roth?  Were taxes withheld and reported on your Form 1099-R or did you make estimated payments directly to the IRS and your state in anticipation of increasing your tax liability by converting the IRA to a Roth?

@Cath1een

[Cath1een]

Hello again.  Yes, we just took a Traditional IRA and converted it to a Roth.  Yes, we have a 1099-R which documents taxes withheld to both the Feds and State.    Thanks.  Hoping to hear more soon.

[fanfare]

most back-door  Roth conversions are tax free if done correctly.

But when Fed/state taxes are withheld, that is considered an early distribution. you will pay tax and penalty on that amount.

A regular conversion is not a tax free event.

[Cath1een]

Hmmm.....not sure about that.  Maybe for someone still working but not for retired folks like us.  I'll wait to hear what others have to say about this one but thanks for responding.

[Cath1een]

Not trying to make it a tax free event.  We had taxes taken out at both Federal and State Levels.  What I'm trying to do is find out HOW to input the Conversion itself and then HOW to report the taxes paid on the conversion to a Roth.

[fanfare]

If you are past 59 1/2 then your IRA will not have an early distribution just a regular distribution.

Enter the 1099-R as shown, including the tax amounts to get credit for that.

Without a form 8606 to show non-deductible contributions, your conversion will be taxed.

If you contributed for 2019 and don't take the deduction, , you can declare that amount non-deductible.

Note that the entire distribution is reported, including the tax withheld.

[Cath1een]

Yes, and part of my question to Intuit TurboTax is how to get to the Form 8606.  Still waiting for that answer.

[AnnetteB6 · Accepted solution]

If you had an existing Traditional IRA and converted it to a Roth IRA, then reporting it on your tax return is just a matter of entering the information on your Form 1099-R (including the taxes that were withheld), and answering the follow-up questions in TurboTax.  The program will take care of filling out the Form 8606 for you based on your answers to the questions.  

After you enter your Form 1099-R that reports the distribution from your Traditional IRA, you should see a question that asks what did you do with the money.  Answer that you 'moved it to another retirement account'.  Then you will see another three options at the bottom of the screen, where you can choose 'converted the money to a Roth IRA'.  After that you will be asked about the specific amount that was converted to the Roth, since part of it was withheld for taxes.  Then, you will come back to the 1099-R summary screen.  

After you leave that summary area, there are still more follow-up questions to answer.  These will include questions about whether there were non-deductible contributions in the Traditional IRA that was converted, plus the total value of all IRA accounts.  This is used to determine the taxable amount for your conversion and to fill out Form 8606.

Use the following steps to get started:  

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “1099-R” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to 1099-R”
• Click on the blue “Jump to 1099-R” link

[fanfare]

make a non-deductible election and 8606 is generated for you.

answer the questions after you enter 1099-R.
Be sure to hit the CONTINUE button

[Cath1een]

Thanks very much Annette - this should be helpful.  It's time to shut this down for today but when we try working on it again tomorrow I may have more questions.  One more bit of information for you now, though.  The only thing that's on the 1099-R is amount of taxes taken out for 2019.  That's because the actual conversion from Traditional IRA to Roth IRA happened in 2018.  At that time we had instructed them to take out taxes but that didn't happen until 2019.  Is that a problem?  We do have the amount that was converted in 2018 on Form 5498 so do we use that as the IRA Conversion amount for Gross Distribution or just use the total amount that was withheld which is what's currently listed on the 1099-R in that box?  Again, thanks for your ongoing assistance.  

[Cath1een]

Hello again Annette.  I'm copying the question I posed late yesterday afternoon again and then I follow it with additional questions based on what we were unable to accomplish today:

One more bit of information for you now, though.  The only thing that's on the 1099-R is amount of taxes taken out for 2019.  That's because the actual conversion from Traditional IRA to Roth IRA happened in 2018.  At that time we had instructed them to take out taxes but that didn't happen until 2019.  Is that a problem?  We do have the amount that was converted in 2018 on Form 5498 so do we use that as the IRA Conversion amount for Gross Distribution or just use the total amount that was withheld which is what's currently listed on the 1099-R in that box?  Again, thanks for your ongoing assistance.  

Well, we tried what I posted above and even though we were able to input the amount converted to a Roth in 2018 AND both the Federal and State taxes we had withheld from that Roth this year, when we checked the 1040 worksheet it didn't show the taxable conversion amount in Box 4b.  That only showed ZERO and indicated that we didn't owe anything on the Roth Conversion.  We know that cannot be correct and also on page 2 of the 1040 worksheet those deducted taxes are not showing either and there was no Form 8606 generated either.  So.....what next?

The 1099-R we did receive on this conversion when we had taxes withheld in 2019 shows ONLY the taxes withheld - nothing about the actual amount that was converted so when I try to input info from that 1099-R as it actually appears - only the taxes and they are lumped together in Box 1 Gross Distribution.

In TurboTax, when we reach the page that asks WHAT DID YOU DO WITH THE MONEY FROM ______?  We are given only 2 options - neither one of which mentions Conversion from IRA to Roth.  It just uses Roll-Over language and that's not what was done from Traditional IRA to Roth IRA.

As you might expect, this is somewhat frustrating as we've tried several things by using TurboTax and can't seem to find a way to input the information we need to input in order to file an accurate return.  In summary we need to:

1) Know how and where to input both Federal and State taxes that were withheld in 2019 from a Roth IRA that was actually converted in 2018.

Hopefully this gives you some additional information from which to work to provide additional assistance.  Thanks much!  Cath1een

[DaveF1006]

Did you receive a 1099R in 2019 for this event? The taxes withheld should be on your 2019 1099R.  There should be input on Box 4 for federal taxes withheld and Box 13 for state taxes withheld.