IRA

Forum|Forum|3 years ago
January 29, 2023
3 replies
14 views

What should I do if I've been filing my Roth IRA as a Traditional IRA. How do I fix it?

TurboTax Deluxe Online

Best answer by ErnieS0

You should fix it. You can file amended returns if you claimed a deduction for IRA contributions. You will owe tax.

If your income was too high to claim a traditional IRA deduction then you will just have to amend your Form 8606s to show the amounts are Roth contributions.

See how to amend form 8606

Mike9241

Level 15

you can convert your IRA to a Roth IRA by simply telling your bank or other financial institution that you want to do so. You can keep your funds at the same financial institution. You can even keep them in the same investments. All you're doing is changing the type of account that holds them. The trickier part is figuring out the tax cost of converting to a Roth. When you convert your traditional IRA to a Roth, two things happen. The government taxes the current value of the funds you convert, and those funds now become your basis in a Roth. The first step is to figure out your Roth conversion income. If you're converting deductible IRA funds, you'd report as income the current value of the funds on the day you make the conversion. Your basis in a deductible IRA is zero because you received a tax deduction for your savings contributions.

If you're converting nondeductible IRA funds, report as income the current value of the funds on the day you convert, less your basis.

Mike9241

GV96Author

Level 2

My IRA is a already a ROTH IRA but I've been noting it on my taxes as a TRADITIONAL IRA. I'm not sure what to do now to fix it. How far back do or can I go to fix it?

ErnieS0Answer

Level 15

You should fix it. You can file amended returns if you claimed a deduction for IRA contributions. You will owe tax.

If your income was too high to claim a traditional IRA deduction then you will just have to amend your Form 8606s to show the amounts are Roth contributions.

See how to amend form 8606

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GV96Author

Level 2

Thank you for your advice. Also, I've made this mistake for over 5 years. Every year that I did my taxes, I just went by the previous year. It wasn't until now that I realized this big mistake. How far can I go back to fix this?

fanfare

Level 15

you have to amend all five years one at a time and pay the tax on the IRA deduction that you will be removing.

you can't deduct a contribution to a Roth.

@GV96

Ed golf

Level 2

Our income consists of social security, a pension, dividends and some stock gains. In the case of the latter, I sold some stocks last yrfor some sizable gains and wanted to offset that someway. Turbotax won't let retake credit for any IRA'ss. that correct?

MayaD

Alumni - Intuit

You may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan. However, If you didn't have any earned income, you can't contribute to either a traditional or a Roth IRA.

Income derived from investments would not be considered earned income.

Compensation for purposes of contributing to an IRA doesn't include earnings and profits from property, such as rental income, interest and dividend income, or any amount received as pension or annuity income, or as deferred compensation.

For more information please check: IRS.gov

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