- Search for IRA contributions in TurboTax and click the Jump to link in the search results.
- Continue after selecting Traditional IRA on the Traditional IRA and Roth IRA screen.
- Fill in the amount you contributed on the Tell Us How Much You Contributed screen and click Next.
- Search for 1099-r in TurboTax and click the Jump to link in the search results.
- Choose how you wish to enter your 1099-R (import or manually type it in) and follow the prompts.
- Select On the other hand, I converted some or all of it to a Roth IRA. Tell us if you used a rollover or a conversion to shift the funds.
- Continue answering questions until you reach the screen that says “Your 1099-R Entries.”
- Your backdoor Roth IRA distributions should be stated on Line 4a of your 1040 Postcard as IRA distributions.
- Unless you have earnings between the time you contributed to your Traditional IRA and the time you converted it to a Roth IRA, in which case the earnings would be taxable.
- Return to where you left off in TurboTax by selecting Back on the left side of your screen.
How do I report a Roth IRA conversion in TurboTax?
IRA, 401(k), and Pension Plan Withdrawals can be found under Federal Taxes -> Wages & Income -> IRA, 401(k), and Pension Plan Withdrawals (1099-R). As you progress through the interview, you will reach the moment where you must enter the 1099-R. Select Yes, you make this kind of money. If you want, you can import the 1099-R.
How do I report a Roth IRA conversion in TurboTax 2020?
- When you get to the box that asks “what did you do with the money?” select “I moved the money to another retirement account.”
- Choose “I converted all of this money to a Roth IRA” if you converted the whole distribution to a Roth IRA.
- Choose “I did a combination of rolling over, converting, and cashing out the money” if you only converted part of the dividend to a Roth IRA. If you select this option, Turbo Tax will ask you how much of the distribution was converted to a Roth IRA and how much was rolled over to another retirement plan.
- After that, you’ll get a screen that states “your 1099R entries.” Continue by scrolling to the bottom of the page and clicking “continue.” Turbo Tax will ask you more questions, and you’ll need your Traditional IRA’s 5498 Form. A year-end statement may also provide the necessary data.
How do I report a Roth IRA conversion on my taxes?
If you convert your traditional IRA to a Roth IRA, you’ll receive two tax paperwork and must disclose the conversion in two locations on your tax return.
Your financial institution will send you a Form 1099-R to reflect the Roth conversion. It will be categorized as a Roth IRA rollover. The information from that form will be used to record your Roth conversion income on Form 8606, with the taxable portion of the conversion income being reported on Form 1040. By the end of January of the following year, Forms 1099-R are usually sent out.
In addition, the financial institution that received the Roth IRA money should provide you Form 5498. This form shows the amount of money received and the account balance at the end of the year. This form is mostly intended for informational purposes. The information does not have to show on your tax return. By May 31, Form 5468 is normally mailed out.
How do I report a Roth conversion on 8606?
You contributed to a traditional IRA and later recharacterized part or all of it to a Roth IRA through a trustee-to-trustee transfer. Report the nondeductible traditional IRA portion of the remaining contribution, if any, on Form 8606, Part I, if you only recharacterized a portion of the contribution. Don’t report the contribution on Form 8606 if you recharacterized the entire amount. In either scenario, include a statement explaining the recharacterization with your return. Include the amount transferred from the conventional IRA on Form 1040, 1040-SR, or 1040-NR, line 4a, if the recharacterization occurs in 2020. If the recharacterization took place in 2021, just record the amount transferred on the attached statement, not on your 2020 or 2021 tax returns.
How do I enter an IRA rollover in TurboTax?
Enter the IRA CONTRIBUTION FOR THE AMOUNT OF TAXES WITHHELD from your 2016 1099-R.
- Fill out your 1099-R form exactly as instructed. If your income tax form has Box 7 with the code G, Rollover, TurboTax will automatically enter it as a Rollover.
- If your form does not have Box 7 with code G, Rollover, select I moved the money….and I rolled over all of the money… on the WhatDid You Do With The Money From This Payer? screen. See the image below.
- Continue with the onscreen interview until you reach the screen that asks you how much money you actually deposited. See the image below.
How do I report an IRA contribution to TurboTax?
- Make sure you contributed to a conventional IRA and then proceed with the rest of the steps.
The trustee will not issue you a 1099 because it is a contribution rather than a payout. To file your taxes, you don’t need Form 5498. When you made/made the contribution, you would have already received confirmation from the IRA.
What is the distribution code for a Roth conversion?
Go to Federal Taxes > Deductions & Credits > I’ll Choose What to Work On > Retirement and Investments > Traditional and Roth IRA Contributions to get started. Fill in the amount of your Traditional IRA contribution. TurboTax will either tell you that your contribution is not deductible or ask you if you want to make your IRA contributions nondeductible, depending on your income and whether or not you have a workplace retirement plan.
Enter your 1099-R at Federal Taxes > Wages & Income > I’ll Choose What to Work On > Retirement Plans and Social Security > IRA, 401(k), Pension Plan Withdrawals once TurboTax has determined that your Trad IRA contributions are nondeductible (that is, you have a basis in your Trad IRA) (1099-R). The 1099-R normally carries a Distribution Code 2 in Box 7 for a Roth conversion. It’s an early distribution, but there’s an exception, therefore there’s no punishment.
Examine your 1040 form to ensure that the correct results are displayed. There should be no IRA deduction entry on Line 32. Line 15a of your 1040 should have the amount from Box 1 of your 1099-R, but Line 15b should be zero.
(If you’re doing this in the current tax year, you can’t alter it and it’s reportable on a lag basis (A roth conversion done after year end prior to 4/15), you may need to submit a form 8606 for the prior TAX YEAR basis, if you’re doing it in the current year for the past year).
Send in the completed 8606 with the NON-Deductible amounts so that it can be reconciled with your current tax return.
(send a letter)
Then prepare the current return, enter the 1099-R, and answer the questions Do you keep track of Non-Deductible Contributions to Traditional IRA, Do you keep track of Non-Deductible Contributions to Traditional IRA, Do you keep track of Non-Deductible Contributions to Traditional IRA, Do you keep track of Non-Deductible Contributions to Traditional YES is the correct answer. The NON-Deductible Contributions you made will now appear on Form 8606, which will be offset by the amount on the 1099-R. Any earnings in the IRA are subject to taxation. As an example, suppose you invested $2000 and gained $15 by March. Because the non-deductible gift was $2000 and the 1099R was for $2,015, the $15 was taxable in the current year.
Are Roth conversions considered income?
A 3.8 percent Medicare surtax may apply to married couples (filing jointly) with a modified adjusted gross income (MAGI) of more than $250,000. (The MAGI levels for married taxpayers filing separately are $125,000 and $200,000, respectively.) The surtax is imposed on net investment income (which includes, among other things, interest, dividends, capital gains, annuities, rentals, and royalties) or MAGI beyond the income thresholds, whichever is lower.
Like all taxable distributions from pretax qualifying accounts, the amount you convert from a traditional IRA to a Roth IRA is recognized as income. As a result, the conversion amount is included in your MAGI and may cause you to exceed the surtax limitations. You may be subject to an extra Medicare surtax on your investment income as a result of this.
The shoe, however, is on the other foot once your money is in a Roth IRA. Because nontaxable withdrawals from a Roth IRA aren’t included in your MAGI, converting to a Roth IRA could help you avoid the Medicare surtax in the future.
Where are Roth conversions reported on 1040?
If you convert money to a Roth IRA, you must use either Form 1040 or Form 1040A to file your taxes. To figure out how much of your conversion is taxable, fill out Form 8606. You record the total amount converted on line 11a and the taxable portion on line 11b if you utilize Form 1040A and converted from a regular IRA. Report the total amount on line 12a and the taxable portion on line 12b if you converted from a 401(k) or 403(b).
Conversions from a traditional IRA are reported on line 15 of your tax return, with the total amount on line 15a and the taxable portion on line 15b. Report the total amount of the conversion on line 16a and the taxable part on line 16b if you’re converting from an employer-sponsored plan.
Where are Roth conversions reported?
You will be taxed on the amount you choose to convert as ordinary income. As a result, this additional income may push you into a higher federal income tax bracket.
Whether or not the underlying contributions to the IRA were deductible has an impact on the ultimate taxable amount. Deductible contributions, as well as any profits on them, are taxed at their current value, so if your Traditional IRA solely has deductible contributions, you’ll owe tax on the entire amount. The nontaxable fraction of nondeductible contributions is calculated using cost basis on IRS Form 8606.
Ways to pay the tax
The IRS will collect the federal tax on a Roth IRA conversion along with the rest of your income taxes due on your return for the year of the conversion. Losses and deductions recorded on the same tax return can often offset the regular income earned by a Roth IRA conversion.
It’s usually a good idea to avoid paying tax on a conversion with funds that are being converted from within your Roth. You’ll have less money in the account to grow tax-free, and if you’re under the age of 591/2, you’ll have to pay a 10% penalty on the amount you don’t convert to a Roth IRA.
Before filing your annual return, you may be required to make anticipated tax payments in the year of the conversion.
Reporting conversions on your return
Any Roth IRA conversion amounts are reported by Fidelity as dividends on Form 1099-R and contributions to the Roth IRA(s) on Form 5498 for the tax year.
The IRS Instructions for Forms 1099-R and 5498 might help you with the 1099-R and 5498. (PDF)
You can also consult your tax expert or read the IRS Form 1040 instructions.
Do I have to pay taxes when I convert a traditional IRA to a Roth IRA?
A regular IRA can be converted into a Roth IRA in whole or in part. You’ll have to pay taxes on the money you convert, but you’ll be able to withdraw money from the Roth IRA tax-free in the future.