When I enter the info. from my 1099-R form during Interview mode I'm supposed to enter all the info. indicated by the form. This includes whether the IRA/SEP/SIMPLE box is checked on the form. On my form that box is checked, yet this is the behavior I see.
- If I leave the box unchecked in TurboTax, a finite tax amount is computed, as I expect.
- If I check the box, then TurboTax indicates there is no tax to be charged corresponding to the conversion.
The second behavior is clearly incorrect. There has to be a finite tax amount associated with the conversion.
I see that a similar inquiry was previously filed for TurboTax here.
But the question asked was never answered within the thread. Seems like there is a bug in TurboTax dating back a few years and never resolved.
What should I do? The only thing I can think of is to leave the IRA/SEP/SIMPLE box unchecked. But that's not what I'm supposed to do given that the box is checked in the 1099-R form.
By the way, I'm wondering if this bug is triggered by the fact that I have multiple 1099-R forms. Within TurboTax, the form where I'm having the problem is the 2nd one in the list.
You are reporting a Traditional IRA to Roth IRA conversion. If the Traditional IRA has no basis (meaning there was never any non-deductible contribution made to the account), then you are right, the result of the conversion would be taxable income reported on Form 1040 line 4b.
But, if the Traditional IRA did have a basis and the amount that was converted was less than or equal to that basis, then there would be no taxable income.
Go back through the Form 1099-R entry and pay close attention to the follow-up questions as well as the follow-up questions after all 1099-R forms have been entered and you are leaving that section of the return. Make sure your answers are accurate because those questions do affect the tax calculation.