I took a non required distribution in 2025 for 25K from my traditional IRA and put the money into my established Roth IRA at the same time. Why is the software asking for the value of my traditional IRA on Dec 31, 2025? Form 5498 is not out yet.

[MinhT1]

TurboTax needs to know the value of all your IRA accounts at end year when you take a distribution or convert part of your IRA to a Roth IRA. This is in order to calculate the basis of the distributed or converted part by applying the pro rata rule.

When your Traditional IRA has basis (from the nondeductible contributions) as reported on form 8606, you have to apply a prorated amount of basis to the distributed or converted amount.

Please read this IRS document for more information.

[sonzoil]

So I am generating form 8606?.  Also, some of the other IRAs I have are in the form of annuties. So when the software asks for a value on 12/31/25, Is an approximate valve then good enough? My broker is not required to send out any 5498 forms until May 2025 and they are not ready yet.  I found values for the annuities, and the traditional IRA for 12/31/25.  Of course when they are ready, the value they give maybe different than what I report as year end values now.  Does this matter? Any AFTER tax contributions that I made to traditional IRAs through the years is a very, very small amount. Since I wrote this reply I made an error putting in the value in the software.  How do I change this value? The screen will not come up again  for me to correct the total value on 12/31/25.

[sonzoil]

CAN AN EXPERT PLEASE RESPOND TO MY QUESTIONS, SO I CAN FINISH MY RETURN? THANKS.

Hello community. First, I was able to correct a field in the software asking for the total end of year value (12/31/25) for MY IRAs. This was asked because I took a non-required distribution from one of MY IRAs and converted it to a Roth IRA.  I was able to finally get a value which included (1) IRA and (2) annuities in my name.  I assume this amount the software is asking for would only be for IRAs in MY name, not my wife's (we file jointly)?? 

My second question is concerning another 1099-R I received from my broker, when I rolled over my previous 401 work plan to one of the Traditional IRAs with my broker.  Even though it is not a taxable event, do I have to list the 1099-R in the software?  I assume so, but this time the software never asks if I rolled it over, just if it's a SEP or if NO taxable amount is listed in box 2 of the 1099-R.  I just want to make sure I am doing this correctly. 

Lastly for a federal energy tax credit, I replaced both a gas water heater and upgraded electrical service to 200amp from 100amp.  Can I take the ENERGY tax credit on the water heater if the manufacturer says it's Energy Star Certified, but has no Energy Star STICKER on the outside of it? The unit has an energy efficiency rating of 62%, but not equal to or greater than 81%.  I also should be able to take the credit towards the electric panel upgrade.  PLEASE ADVISE.

[RobertB4444 · Accepted solution]

Yes to your first question - the balance from 12/31 that the system is asking for is as of 12/31 for traditional IRAs in your name only, not your spouse's .  I am a little concerned about the annuities.  Unless they are annuities using an IRA then they don't need to be included here.  Which is to say, if you paid taxes on the money that you put into the annuities before you put it in there then they don't count.

Yes to the second question as well.  It is not a taxable event but it is a reportable event when you roll over an IRA.  The code in box 7 on that 1099-R tells the system that it is a tax free rollover and putting a zero in box 2a is just what you should do.

As far as the electrical credits the requirements are pretty stringent and those are going away after this year.  Whatever credit you decide to take make sure to have all of your documents that back you up ready to go in case anyone asks any questions.  And, based on what you wrote, I would not think your water heater qualifies.  

[sonzoil]

Ok, thanks for your input. 

As a follow up, the (2) annuities that I included in the total year end value are listed on my broker account as "traditional IRA".  So again, I included them in the total but left the amount previously taxed by Massachusetts (my state) blank.  

As per my second question, can you post a response to this question I posted? It is about that 401K to IRA transfer question as well,

Question On Massachusetts Individual Return

 

Can someone please tell me on the Massachusetts Individual Return form1, under part 3 (wages, salary,tips , then under Pension types, no boxes are populated automatically from the drop downs? Should I populate them manually? Also, of the two pensions I inputted, for the pension amount for a distribution from a work 401 rolled over to an Traditional IRA, the amount is populated as ZERO. I know it is not taxed, but shouldn't there have been a dollar amount of the distribution in the field? It was a type G distribution on my 1099R.  Thanks for help.

[DianeW777]

Let's review your questions here.

1. Can someone please tell me on the Massachusetts Inv Return form1, under part 3 (wages, salary, tips , then under Pension types, no boxes are populated automatically from the drop downs? Should I populate them manually? 
   1. MA law follows federal law which means it it's not taxable to federal it will not be taxable to MA. If you are saying one of your 1099-Rs is a taxable distribution (not rolled over) then you should see the same amount on the MA return. Follow the Step-By-Step to enter your forms.   Where do I enter Form 1099-R?
      • MA Retirement Rules
2. Also, of the two pensions I inputted, for the pension amount for a distribution from a work 401 rolled over to an Traditional IRA, the amount is populated as ZERO. I know it is not taxed, but shouldn't there have been a dollar amount of the distribution in the field? It was a type G distribution on my 1099R.  Thanks for help.
   1. No, not necessarily. The Code G is a clear description that explains it was rolled over and this distribution should not be taxed.

Please update if you have additional questions and include any details you may have.

@sonzoil 

[sonzoil]

So, at this point, I should not populate any fields that were not populated already.  Like the drop down type boxes or any amount fields?