Pro-rata rule on Backdoor Roth

[vc22]

Hi Experts,

I rollover total of 88830 (pre-tax) from my 401K to IRA in 2024. Also, I made a contribution of 7000 dollars (after-tax, non-deductible) to IRA then convert all 7000 to Roth IRA (through backdoor Roth). I then realized that based on Pro-rata rule, I have to pay tax on the 7000 converted to Roth IRA.

On Turbo Tax, I entered:

IRA basis from Form 8606 : 28895 (information I get from my 2023 tax form 8606)

2024 Year end IRA: 88830 (not including Roth IRA)

Then, I can see the taxable amount from 7000 in the 1040 is 4384. And My Feb tax amount seems right (which is about 25% of 4384). However, my California Tax amount increased 2614 more, which is about 60% of the 4384.

Can anyone help me to figure it out why?

Is there a way I can know the taxable amount in California on TurboTax for the IRA portion?

8606 IRA basis	2024 Year end IRA	Taxable amount from 7000	Feb tax	California Tax
28895	88830	4384	1132	2614

[MarilynG1]

If your Total Tax amount on California Form 540 increased by 2614, this may not be due to any calculations on Form 8606, since yours seems correct. 

Here's more info from CA FTB:

If a taxpayer makes a transfer from a traditional IRA to a Roth IRA and the transfer is not eligible for treatment as a qualified rollover contribution (such as in the case where a taxpayer's adjusted gross income exceeds $100,000), the amounts transferred (other than amounts attributable to nondeductible contributions) are includible in gross income and subject to the 10 percent tax on early withdrawals.  

This could be affecting the amount of your CA tax.  

I would suggest that you use the interview to step through the entry of your 1099-R and all follow-up questions again.  If you're using TurboTax Online, clear your Cache and Cookies first.

Here's more info on How to Enter a Back-Door Roth Conversion and Form 8606.

@vc22