As I was working through my Roth IRA contribution in TurboTax, I noticed a potential issue with the Roth IRA Contribution Limit Worksheet—specifically with Line 1, which is meant to reflect modified adjusted gross income (MAGI).
In my case, TurboTax entered a value on Line 1 that exactly matches my adjusted gross income (AGI) from Form 1040, line 11, with no modifications. However, I completed a Roth IRA conversion from a traditional IRA in 2024. The converted amount should be subtracted from AGI when calculating MAGI, so I expected my MAGI to be lower than my AGI. But in the worksheet generated by TurboTax, they are the same.
To support my understanding of the MAGI calculation, IRS Publication 17 (2024), Worksheet 9-2 (Modified AGI for Roth IRA Purposes), shows that “any income resulting from the conversion of an IRA (other than a Roth IRA) to a Roth IRA (included on Form 1040 or 1040-SR, line 4b)” is subtracted from AGI when calculating MAGI for Roth IRA purposes.
Am I missing something here, or could this be a calculation error in the software?
I found the issue after some research in the discussion forum. TurboTax does not recognize the Roth conversion even though it's reported on the 1099-R. I have to indicate in TurboTax that I moved the conventional IRA funds to another retirement account, that I did a combination of rollover, converting and cashing out, then indicate the amount converted to Roth. After this correction, the MGAI has the right amount and the contribution limit was updated.