I contributed after tax $7000 to traditional ira then converted it to roth ira then withdrawn it. How to remove $7000 taxable income of traditional ira distribution?

Forum|Forum|1 year ago
March 17, 2025
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I contributed after tax $7000 to my traditional ira then converted all to my roth ira next day in 2024 then withdrawn this $7000 from my roth ira in march 2025 before deadline. The balance is like nothing happened. But I got extra $7000 taxable income of traditional ira distribution after filling all the information in turbotax. how can I correct it to remove this extra $7000 taxable income?

Best answer by DanaB27

@DanaB27 Token number 1291254

I tried your suggested input but the problem has not resolved, I followed your instruction of the “diagnostic” file, the above is the token number, can you help?

Thank you!

Thank you. I reviewed your return. You entered a recharacterization in the IRA contribution interview you need to delete the entry on the "Tell Us How Much You Transferred" screen.

Please note since you entered a value on December 31. 2024, part of your conversion is taxable according to the pro-rata rule.

FYI, TurboTax is using Taxable IRA Distribution Worksheet instead of Form 8606 per Pub 590-B to calculate the nontaxable portion as indicated by the * next to line 13.

ThomasM125

For one thing, when you entered the IRA contribution, you needed to make sure you indicated that it was a non-deductible contribution. You also have to answer the questions correctly regarding the value or basis in your IRA both at the end of the previous and current year.

When you enter the 1099-R form in TurboTax for the rollover of funds to the Roth IRA, you need to first indicate that you moved the money to another retirement account and that you did a combination of rolling over, converting or cashing out the money. Then, enter the amount converted to a ROTH IRA. Later on you need to indicate that you tracked non-deductible contributions to your IRA.

Later in the routine enter the basis (non-deductible contributions) of your traditional IRA at the end of the previous year, and later the value of your traditional IRA at the end of the current year.

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shengwangsterAuthor

@ ThomasM125

Thank you for your answer. I tried several times, still not working.

It seems the turbo tax income input part is fully from 1099-R which I can not change, I have my 1099-R 2a showing taxable income of $7000 and 2b Taxable amount not determined box checked. Then after I input all the information in turbo tax deduction part, it thinks this $7000 contribution is nondeductible by itself. Thus left net $7000 as my taxable income. In my case, I input in turbo tax my traditional IRA is 0 balance at the end of year 2023 and at the end of year 2024 as I only have two transactions, transferred in and out $7000 in one day in 2024, seems turbo tax can not translate such information I input in deduction part to remove the $7000 Taxable amount in 1099-R 2a for my income as my 1040 line 4b still showing $7000. Can I manually adjust 1099-R 2b to 0 as input in turbo tax income? or there is somewhere else I can do input to correct it?

shengwangsterAuthor

Add one more detail information, my 1099-R box 7 code is 2, I think my situation is supposed to be code N--Recharacterized IRA contribution made for 2024 and recharacterized in 2024. Is this the reason this $7000 becomes taxable income from my traditional IRA distribution in turbo tax? How can I fix it?