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Not applicable
posted Feb 17, 2022 6:37:39 AM

TurboTax not recognizing Roth IRA overcontribution due to income phaseout

I think we over contributed to Roth IRAs due to income, but TurboTax isn't recognizing it for some reason so it's making me question it.

 

Filing Married Jointly, both of us are under age 50.  My spouse and I each contributed $6,000 to a Roth IRA in 2021.  We have a modified AGI of $200,891 (same as our AGI) consisting of $196,236 in combined W2 income, $60 in bank interest, and $4,595 in taxable IRA withdrawals from my spouse's conversion of a Pre-Tax Rollover IRA to a Roth IRA.  This puts our MAGI firmly in the range of the 2021 Roth contribution phaseout for incomes of $198,000 - $208,000.

 

I assumed TurboTax would prompt me that I have over contributed when I entered our Roth IRA contributions, but it didn't. It just asked if I made any excess contributions in a prior year. No identification that I made an overcontribution, need to pay a penalty, etc.  I've gone all the way to the end of the return process, to the point that it is asking me for payment, but there is no indication anywhere that I overcontributed and either need to remove/recharacterize the excess contribution or pay a penalty.

 

Am I missing something? Does TurboTax really not recognize an overcontribution to Roth due to income phaseout? Could it potentially already (incorrectly) be using 2022 income limits, which have a higher phaseout start of $204,000? It would be great if I didn't actually overcontribute but something doesn't seem right here.

 

Thanks in advance.

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1 Best answer
Level 15
Feb 17, 2022 9:33:02 AM

What you appear to be missing is that the amount of the Roth conversion is subtracted from AGI to determine MAGI for the purpose of making a Roth IRA contribution.  Reducing $200,891 by $4,595 brings you under the $198,000 threshold.

2 Replies
Level 15
Feb 17, 2022 9:33:02 AM

What you appear to be missing is that the amount of the Roth conversion is subtracted from AGI to determine MAGI for the purpose of making a Roth IRA contribution.  Reducing $200,891 by $4,595 brings you under the $198,000 threshold.

Not applicable
Feb 17, 2022 10:07:15 AM

Thank you!  I did not realize that, but now that you mention it I see that this is true.