Our joint inome for 2022 was about $49000. I did not get the tax savers credit after contributing to a 401k like I did in 2020. I did rollover $10000

[dmertz]

The foreign tax credit should not affect the Retirement Savings Contributions Credit since you still have income tax liability.

[dmertz]

I've added $482 of foreign tax credit to my test and I still see $150 of Retirement Savings Contributions Credit being applied for a $1,500 retirement contribution.

[canuck97]

@dmertz Ok I found what is causing the credit to be denied.

As I told you earlier i converted 10k to a roth in 2022 and 100k in 2021.

When I go through the retirement savings credit web pages in turbo tax I entered these values on the pages where it asks, did you receive any distributions from a retirement plan and I entered 100K for 2021 and 10K for 2022, assuming that when I had entered in my 1099-R information where I said this was a Roth conversion, it would remember that here.   It does not.  If I delete the entry for the 2021 and 2022 retirement distributions then I get the savers credit as expected.

So in your test case you apparently have no retirement plan distributions entered under the retirement savings credit web pages.   It seems like turbo tax should be asking here again if these distributions were converted to a Roth and therefore does not affect the credit.   Or it should remember this info in this section after it is entered for the 1099-R page

[canuck97]

@dmertz  OK i found out why my tax credit was being denied.

When you go through the web pages for the retirement savings credit, there are pages that ask you have you have taken any distributions.  As I told you earlier, I converted 10K to a Roth in 2022 and 100K to a Roth in 2021.

On a subsequent page in this section, I then entered that I had these 2 distributions in 2021 and 2022.  If I delete these entries then I get the savers credit as expected.  I was expecting that turbo tax would remember that these distributions were conversions to Roth since i entered that info when I entered my 1099-R form.

So am I not supposed to enter these distributions in this section or not?   Seems like turbo tax should remember that these were Roth conversions or ask the question in this section again.

[dmertz]

I agree, TurboTax's guidance as to which distributions not to list is lacking.  Even in the CD/download version the Learn More provides "This list of items do not [sic] reduce your eligible retirement contributions" but does not say not to enter them.

Expecting TurboTax to remember in this section that you did a rollover, particularly a rollover in a prior year if that happened, is giving TurboTax too much credit.  I would not have considered entering rollovers because I'm familiar with the instructions for Form 8880 and why TurboTax is asking for distributions.  the IRS instructions explicitly indicate not to include rollovers.

[canuck97]

@dmertz  Thanks so much for your many replies and patience through this.

So for other people reading this thread can we summarize this and close this off?

Do you agree that when going through the retirement savings credit section of turbo tax that you should not list any distributions that were conversions to Roth IRAs.

[dmertz · Accepted solution]

Correct.  Roth conversions are not to be entered anywhere in the Retirement Savings Contributions Credit section.