Roth Conversion

[jimb108]

I did a Roth conversion in April while living in NY. I did a second Roth conversion after moving to CT in October.  How will TT apply that income to the appropriate state for my state filings?  Or does al my Roth conversions get added to my current state of residence?

thanks

[Opus 17]

You owe state income tax for all your world-wide income to the state where you permanently live (your domicile).  Assuming your move is permanent, and you changed domiciles, then income that was paid to you when you were a resident of state A is taxed by state A and income paid to you when you were a resident of state B is taxed by state B.

For your situation, you will create a part-year resident NY return and a part-year resident CT return, by giving Turbotax the date you move out of NY and into CT.  Then, you will be asked to manually allocate all of your income to each state.  For each item of income (wages, dividends, bank interest, 1099-R, lottery prize, etc.) Turbotax will ask how much was paid while you were living in each state. If you changed jobs when you moved, then presumably, 100% of income from one job belongs to NY and 100% of income from the other job belongs to CT.  You will be asked to provide the same information for all your other types of income. 

[jimb108]

Thank you very much. Your assumptions about this being a permanent move and new job, new state were correct.  While I wait for TT Premier 2021 to become available I am walking through a draft version using the 2020 version without actually having my 1099 yet.  When I come the drop-down for box 7 of the 1099-R would I be selecting "normal distribution" since there is no option for  IRA to Roth conversion.

thanks in advance

[Opus 17]

@jimb108 

If you received a check, and you sent the money to the Roth account yourself, then the 1099R will have code 1 for a normal distribution. TurboTax will then ask what you did with the money and you should be able to answer that it was a Roth conversion.  If this was a direct conversion from one plan to the other, it will be code 2 and that should take care of it.

[jimb108]

Thanks again. It was a conversion from an old 403b at TIAA to an IRA at Fidelity then immediately to a Roth IRA at Fidelity.  Just to make sure we're in sync, Option 2 says "Early distribution (except Roth IRA) exceptions apply".

Is that the one you referenced ?

Much appreciated!

[Opus 17]

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@jimb108 wrote:

Thanks again. It was a conversion from an old 403b at TIAA to an IRA at Fidelity then immediately to a Roth IRA at Fidelity.  Just to make sure we're in sync, Option 2 says "Early distribution (except Roth IRA) exceptions apply".

Is that the one you referenced ?

Much appreciated!

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You will get a 1099-R from TIAA definitely, and I a separate one from Fidelity.  Assuming this was a direct rollover, with the money directly from one plan to the other, your TIAA 1099-R will have code G (for a 403b to IRA rollover) and the 1099 from Fidelity will have code 2 (Roth conversion).