TurboTax shows I owe penalty, but it is wrong...

[dlf1018]

I have a couple questions and hoping someone can help me:

1) I owe less than $1,000, but TurboTax shows I owe a penalty. I checked the IRS' website and, based on the info I found, I fall under all 3 categories of not being penalized. Not sure what to do to remove this penalty? Unless the program, for some strange reason, is using the "110% Rule", which would be incorrect since last years Adjusted Gross Income for us was less than $150K. We did a Roth Conversion in December, and paid 4th quarter taxes prior to January 15, so still not sure why the program is penalizing us?

2) Regarding our Roth Conversion, in our tax return under section "Form 1099-R, Summary" "Traditional IRA Distributions", line 9 is blank, "Taxable amount of Roth IRA conversions". Shouldn't our Roth Conversion amount be in this box and not line 8, "Taxable amount not converted to Roth IRA", where the amount was placed? I double checked the 1099-R with what was entered in the program, and it all matches. The distribution code used is "7". I didn't see any other choices that would fit this entry.

Thank you for the help!

Dave

[ThomasM125]

Normally if your tax due is less than $1,000 you won't be subject to a late payment of tax penalty. However, that is assuming you make your necessary quarterly tax payments on time. I suggest you complete the underpayment penalties section under Additional Tax Payments in the Other Tax Situations menu in TurboTax to see if the penalty can be reduced or eliminated.

The taxable amount of the ROTH IRA conversion should be in box 9 on the Form 1099-R Summary worksheet. I suggest you review your Form 1099-R entries and make sure you indicated that you moved the money to another retirement account, that you did a combination of rolling over, converting, or cashing out the money, and that you entered the amount converted to a Roth IRA account on the screen that says What Did You Do With The Money from (name of broker):

[dlf1018]

Thank you so much for the information. I really appreciate your help!

Dave

[fd65]

Have called into Truman tax but can not get an answer on why a penalty is coming up for my IRA.  Looks like a bug in the online  software.  Can you help out?

[VolvoGirl]

@fd65   Is it a penalty for not taking the full RMD or  for excess contribution to your IRA?  

[fd65]

Penalty for not taking the full RMD but we did 

[DanaB27]

Please review your RMD answers after you enter Form 1099-R:

1. Click on "Search" on the top right and type “1099-R”
2. Click on “Jump to 1099-R” and enter your 1099-R
3. On the "Required Minimum Distribution" screen enter RMD for this account 
4. On the "How much of This Distribution Applied to your December 31, 2024 RMD" select "The entire distribution applied…"  / or select "Some of this distribution…" and enter the RMD amount (if this distribution includes RMD for other IRA accounts then you included the amount here)
5. On the "Your 1099-R Entries" screen click "Continue"
6. On the "Did You Miss a Required Distribution From Any Retirement Accounts?" screen select "None of these plans failed to withdraw the RMD" if you met all of your RMD for 2024. 

@fd65