Turbotax 2025 for PC Inflating State Income with Roth Conversion

[Ken2025]

I did a Roth conversion from a Traditional IRA in Dec. 2025. I entered my 1099-R exactly as shown. Taxes were withheld for state and fed at the time when converted.  In TT, the box was checked indicated I converted all or part of it to a Roth. Next screen I checked No to indicate that I converted an amount less that withheld for taxes. Fed appears to be correct. For the state of Alabama return, the Schedule RS part 2 shows the taxable amount in column I to be the gross converted from the traditional IRA PLUS the net after taxes. Obviously incorrect and this makes my total income in the state forms to be incorrect.  This appears to be a bug. Please advise on how to correct this.  I sent the tax file for review.

[DaveF1006]

Since you've already sent the file for review, you likely won't hear back for days. You can fix this manually by forcing the software to ignore the "extra" bucket:

Revisit Alabama State Interview:

1. Go to the State Taxes tab and select Alabama. 
2. Navigate to the Income section and find Retirement and Pension Distributions.
3. Click Update or Revisit.
4. The "Some or All of Your Distribution is Taxable" Screen:
5. You will likely see a list of your 1099-Rs. Click Edit next to the conversion 1099-R.
6. You will see a field for "Taxable Roth IRA Conversion." * The Fix: If the number there is already filled in, try changing it to $0.
7. Why? Alabama already pulls the taxable amount from the Federal 1099-R data you entered. By entering $0 here, you stop the "State-only" interview from adding a second layer of tax to the same transaction.

Check Schedule RS Part 2 Again:

• Go to Forms Mode (top right) and open Schedule RS.
• Check if Column I now correctly matches the Gross Conversion amount.

3. Alternative Fix: The "Manual Column I" Correction

1. If the "Zero" trick doesn't work, the bug is "hard-coded" into the worksheet.
2. In Forms Mode, open the Retirement Income Worksheet (or the Schedule RS Part II Worksheet).
3. Look for the line calculating the Alabama taxable amount.
4. Override the field: Right-click (or Command-click) on the incorrect Column I amount and select Override. Enter the correct Gross Distribution amount from your 1099-R.

Overrides can sometimes block e-filing, but for this specific state bug, it's often the only way to get a correct Alabama Form 40.

[Ken2025]

Thanks DaveF,

I think with your help I now have it sorted out. Seems like this is a reoccurring problem though. I wonder why they don't just fix the bug and add more help in the program?