How can I pay taxes on pretax 1099 distribution to make the money after tax?

[Ajp256]

Received a 1099 R from employer for a profit sharing plan - It's pretax money. I did not roll this into another pretax account - Instead I put it into a traditional IRA and then rolled it into a Roth IRA for backdoor. Realizing now I should have paid taxes on this 1099 distribution first before rolling. How can I correctly reflect it?

[DavidD66]

When you put the profit sharing distribution in a traditional IRA, assuming it was done within the 60 day limit, that was a tax free rollover.  A traditional IRA can have both pre-tax and after tax funds in it.  If you don't want that to be a tax free rollover, then you just don't tell the program that you rolled it over to an IRA.  That will make it a taxable distribution.  If you are not yet 50 1/2 years old, you will also have to pay a 10% penalty (excise tax) on the full amount of the distribution.  If you don't want it to be a taxable distribution, indicate after entering the 1099-R that you rolled it over to an IRA.

When you rolled the funds into a Roth IRA, it was a Roth Conversion.  How that is taxed depends on whether you treat the distribution from the profit sharing as taxable or non-taxable. You're going to pay tax on the distribution, it's just a question of which transaction you treat as taxable.   

[Ajp256]

The only option it gives me towards moving it to an IRA is 'Did xxx move the money to a Roth IRA?' and I hit no. It doesn't ask if it was transferred to a traditional IRA.

Should I add the full amount to box 2a?

[DanaB27]

To confirm you have two Form 1099-R? One for the rollover the Traditional IRA IRA with code G and one for the conversion from Traditional IRA to Roth IRA?

Please enter all Form 1099-Rs as received.

For the Form 1099-R with code G when you say "No" to the follow-up question TurboTax knows this was rolled over to another pre-tax account:

1. On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
2. On the "Did you move the money to a Roth IRA?" screen answer "No"

Then you will enter the 1099-R for the conversion (which is taxable since you had pre-tax funds in the Traditional IRA):

1. Enter the information from your 1099-R for the conversion
2. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion" screen and choose “I converted some or all of it to a Roth IRA”