Roth IRA conversion in TurboTax 2020

[gehua]

I have been following this topic to enter the backdoor Roth IRA conversion into TurboTax 2020 Home and Business. However, I can go as far as Step 2-6 from the topic because there is no option of "I converted all of this money to a Roth IRA account." 

There are two options on my screen:

• ** roll over all of this money to another traditional IRA or other retirement account (or return to the same account)
• ** did a combination of rolling over, converting, or cashing out the money.

No.2 is clear the wrong one. No.1 option is about "roll over" which is not the same as "conversion".  What can I do to make it a roth IRA conversion?

[macuser_22]

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@gehua wrote:

I have been following this topic to enter the backdoor Roth IRA conversion into TurboTax 2020 Home and Business. However, I can go as far as Step 2-6 from the topic because there is no option of "I converted all of this money to a Roth IRA account." 

There are two options on my screen:

• ** roll over all of this money to another traditional IRA or other retirement account (or return to the same account)
• ** did a combination of rolling over, converting, or cashing out the money.

No.2 is clear the wrong one. No.1 option is about "roll over" which is not the same as "conversion".  What can I do to make it a roth IRA conversion?

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No 2 is the correct answer since TurboTax removed the "converted all" choice.   Just say a combination and enter the amount converted in the lower box.   That is the same thing.   ("Combination" is the wrong wording - it should say one or more of the following).

[gehua]

Thanks for the tip. I gave a try on No.2 "did a combination of rolling over, converting, ..." but it did not work as expected.

After pick that option, I picked "did not make or track nondeductible contributions to xx's IRA". Then it asked me about "total value of all xx's traditional IRA SEP SIMPLE IRA accounts on 12/31/2020. This information is sent by mail on Form 5498". First, I don't have form 5498. Second, Any value entered here (other than 0) resulted in tax increase, which was against the intent of Roth IRA conversion.

[macuser_22 · Accepted solution]

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@gehua wrote:

Thanks for the tip. I gave a try on No.2 "did a combination of rolling over, converting, ..." but it did not work as expected.

After pick that option, I picked "did not make or track nondeductible contributions to xx's IRA". Then it asked me about "total value of all xx's traditional IRA SEP SIMPLE IRA accounts on 12/31/2020. This information is sent by mail on Form 5498". First, I don't have form 5498. Second, Any value entered here (other than 0) resulted in tax increase, which was against the intent of Roth IRA conversion.

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You get the year end value from the December statement for your account (or accounts if more then one).   You do not need a 5498 form.

Yes, when you enter the year end value the tax will appear to go up - that is the purpose.     Without the year end value ALL the remaining non-deductible basis will be applied  to the conversion instead of just a prorated portion as tax lay requires.     That might look good now with lower tax, but not so good when  the IRS audit letter comes in a year of so with a big bill for back tax and penalties.

The calculation is done on the 8606 form lines 1-15.

[gehua]

Thanks for the answer. I did take a look through Form 8606. The calculation is just what you said. Thank you.