Backdoor Roth - State Taxes went up

[koswami]

I entered the backdoor Roth IRA contribution in the Wages & Income section and Deductions and Credits section.  My federal tax due was unchanged, but my state tax went up.  Why did my state tax go up, I expect it to stay the same.

[DanaB27]

What is your State?

[koswami]

It is PA.

[DanaB27]

To clarify, when you look at your PA tax return on Form PA-40 is the conversion amount included on on line 1a  Gross Compensation? It should not be included and therefore not affect your state tax due.

[koswami]

Yes, it seems to be included there of some reason. How do I remove it from there?

[DanaB27]

You might have to delete and renter your 1099-R on your federal return and then go back through the state return.

1. Click on "Search" on the top right and type “1099-R”
2. Click on “Jump to 1099-R”

Please make sure you have you TurboTax software updated (if you are using TurboTax Download) or if you are using TurboTax Online clear your cache and delete cookies before reentering your 1099-R.

If this doesn't help then please see What is the TurboTax phone number?

[koswami]

I tried but it seems to increase the state number when I select Box 7,  2-  Early distribution (expect Roth IRA).  Right after selecting that state tax goes up.

[DanaB27]

It would be helpful to have a TurboTax ".tax2021" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Desktop: 

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"
3. Click "Send"
4. The pop-up will have a token number
5. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

Instructions for TurboTax Online:

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

[sg11sg]

I have this issue too with MA. How did you resolve it. This was not an issue last year.

[sg11sg]

I too am having this issue. My federal tax stays the same, but my MA tax goes up.

[sg11sg]

The only way I could fix this was to manually enter line 1C in Schedule X of the MA taxes: "Total contributions previously taxed by Massachusetts". When I entered my contribution amount, then the additional tax disappeared.

[koswami]

I haven’t figured out a way to fix this yet. I was thinking maybe a update will fix this. 

@dmertz any ideas?  You helped fixed my issue last time

[koswami]

Hi @DanaB27 .  Here is my token number. 948410

[sg11sg]

I think I was right wrt to what I did earlier, ie manual entry. While doing my state taxes, this question came up with the $7000 prefilled from my manual entry. Taxable IRA/Keogh Distributions - XXXX
XXXX's federally taxable IRA/Keogh plan distributions received during 2021 are $7,000. To
determine the taxable amount for Massachusetts, enter the following information.
Other Contributions Previously Taxed by Massachusetts
7000

[DanaB27 · Accepted solution]

I reviewed your file. During the PA state interview, you are able to enter your basis on the "Retirement Income Summary" screen. Click "edit" and enter the basis for you and then for your spouse.

1. Go to your state interview
2. Click "Update" next to "Income and Adjustments"
3. On the "Retirement Income Summary" screen click "edit"
4. Enter the basis for you and then for your spouse

@koswam