Traditional IRA conversion to a Roth IRA in TT Deluxe 2021

[Finn27]

My financial advisor converted $60,000 from my traditional IRA to a Roth IRA. They withheld $12,000 for taxes. ($7,200 for Federal and $4,800 for State) I received a 1099-R that indicates the taxes that were withheld, and in Box 7 it has the code as 7. I am 65 years old. How do I enter this so I am not paying tax on it again and so it does not say that I have exceeded the contribution amount by $53,000 and I am being penalized. Will TT properly fill out Form 8606? I am using TT Deluxe 2021. This transaction was performed in 2021. 

[dmertz]

Nothing about this is to be entered under Deductions & Credits.  Go back to the Retirement Savings section under Deductions & Credits and remove the IRA contribution that you entered there.  Only enter the Form 1099-R and indicate that you moved the funds to another retirement account and that you converted $6,000 to Roth.

The $72,000 of federal tax withholding shown in box 4 of the Form 1099-R is credited on Form 1040 line 25b and will either decrease your balance due or increase your refund.  The $4,800 of state tax withholding shown in box 14 will be similarly credited on your state tax return.

Yes, TurboTax will automatically prepare Form 8606 Part II [not Part III as I originally stated] showing the $60,000 Roth conversion.

[Finn27]

I followed your instructions and I believe that I've got it! One additional question: Will the $60,000 that I converted from the traditional IRA to the Roth IRA show up on Form 1040 on Line 4a IRA Distributions and Line 4b Taxable amount? The $60,000 showed up on both of those lines. The $7,200 in withheld taxes did show up on Line 25b for Federal income tax withheld from Form 1099. It also populated Form 8606 Part II Line 16 and 18. 

[dmertz]

Assuming that you have no basis in nondeductible traditional IRA contributions (which appear to be the case given your description of the results on Form 8606) and no other IRA distributions, lines 4a and will show $72,000 (the entire gross distribution).

In my earlier reply I should have said Form 8606 Part II will show the Roth conversion, not Part III, so your Form 8606 sounds correct with $6,000 on lines 16 and 18..