The page "How do I enter a backdoor Roth IRA conversion?" lists the steps for a Roth Conversion but at the end it has a section:"To check the results of your backdoor Roth IRA conversion, see your Form 1040:" Under step 3 it states "Line 4a IRA Distributions. Your backdoor Roth IRA amount should be listedLine 4b Taxable amount should be zero, unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to a Roth IRA"I thought any money I move from a regular IRA to a Roth IRA is 100% taxable. Why would the taxable amount be zero? @ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-ira-conversion/L7gGPjKVY_US_en_US?uid=lfabjfq3 https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-ira-conversion/L7gGPjKVY_US_en_US?uid=lfabjfq3

TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

Level 2

Question

IRA to Roth Conversion 100% or Zero Taxable??

Forum|Forum|3 years ago
March 15, 2023
2 replies
1 view

The page "How do I enter a backdoor Roth IRA conversion?" lists the steps for a Roth Conversion but at the end it has a section:"To check the results of your backdoor Roth IRA conversion, see your Form 1040:"

Under step 3 it states "

Line 4a IRA Distributions. Your backdoor Roth IRA amount should be listed
Line 4b Taxable amount should be zero, unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to a Roth IRA"

I thought any money I move from a regular IRA to a Roth IRA is 100% taxable. Why would the taxable amount be zero? @ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-ira-conversion/L7gGPjKVY_US_en_US?uid=lfabjfq3

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-ira-conversion/L7gGPjKVY_US_en_US?uid=lfabjfq3

loreann79

Level 2

When you convert money from a traditional IRA to a Roth IRA, said money is added to your normal income on your tax return. You owe tax on your normal income as is worked out on your tax form so said money is taxed.

BethboatAuthor

Level 2

Thank you for answering my question so quickly. If the distribution is taxable, why do Turbotax support end up making the entire distribution NON taxable and the instructions say that that's what it's supposed to nontaxable. So the support page is wrong. Here's what I get if I follow the instructions.

1040 4A IRA Distributions: $150,160

1040 4B taxable amount: $0

How can I enter the Roth conversion without it making it nontaxable?

BethboatAuthor

Level 2

I think the instructions for checking the 1040 at the end are wrong. The taxable amount should not be zero it should be equal to the amount converted from the reg IRA to the ROTH IRA.

The instructions under Step 1: Enter the Non-Deductible Contribution to a Traditional IRA

Check the box for Traditional IRA and Continue

are wrong. You need to check the box "Roth IRA"

Then all the numbers work out.

4a: Ira Distributions: $150160

4b: Taxable amount: $150160

@https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-ira-conversion/L7gGPjKVY_US_en_US?uid=lfabjfq3

loreann79

Level 2

This is how I understand it although I am not an expert. All funds removed from a traditional IRA are taxable as ordinary income. As far as I know, if you convert traditional IRA to ROTH there is not a tax on this conversion to ROTH when it is big. Later, when you do withdraw from ROTH, even if is years from now, there is no tax because you paid tax when you contributed to ROTH.

What you may be encountering is a new rule - If your total income exceeds 250,000.00, due to a larger than usual (do not know what constitutes usual) withdrawal from trad IRA for conversion to Roth, there is an additional tax on the IRA withdrawal amount that causes your income to exceed 250,000.00. It is reported on line 23 of form 1040. I believe it is approximately 3.2% of IRA withdrawal causing you to exceed 250,000.00. This is not a tax on Roth contributions - my understanding is it is part of having wealthier people pay more tax.

Don't know if this fits your case, but it may explain what is going on.