Massachusetts tax shows back door roth conversion as income

Forum|Forum|4 years ago
March 6, 2022
3 replies
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since you declare that you already paid tax, back door roth conversion amount is not taxed in massachusetts tax ; however this amount being shown still as income in the summary of tax form. would it cause any problem?

Best answer by GeorgeM777

That is what I precisely did; So, no tax is calculated on that amount for MA tax (non deductible IRA converted to backdoor Roth ORA). That is good ; however, in the summary at the end of the state tax return, along with W2 amounts, turbo tax shows this amount also as additional income. It implies as though, this is additional income above and over w2s, which is not the case. This is part of already tax paid income of w2. My question is, would this create a problem, as though I did not pay tax on that amount?

No, it should not cause a problem assuming the funds used for the back door Roth IRA conversion were after-tax dollars that were essentially deposited into a traditional IRA for the sole purpose of funding your Roth IRA. Moreover, the TurboTax summary pages are not forwarded to the IRS. What is forwarded to the IRS is your federal return, schedules, and MA return.

To follow-up on the comments from @DanaB27, while the summary may show your back door Roth IRA conversion as additional income, what is most important is whether your MA return shows it as taxable income. It appears from your question that your MA return does not show the Roth IRA conversion as taxable income and that is what we want to see on your MA return.

@bhim80

JohnB5677

Please clarify what you are rolling over?

Is it an IRA to a Roth/\? or
Is it a 401-K or another qualified plan to a Roth?

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bhim80Author

Nondeductible IRAs are converted into Roth IRA with out any further tax burdens , which is called backdoor roth conversion. involves two steps: pay to non deductible IRA and then convert it into Roth IRA immediately. So, that money is converted ,( not distributed). Turbotax is showing it also as income, even though you can make turbo tax not to estimate tax on that. But, turbo tax is showing it along with other income as though it is additional income, which may cause problems with MA Revenue dept.

DanaB27

During the MA state interview, you can enter the amount previously taxed on the "Taxable IRA/Keogh Distributions" screen. Enter the nondeductible contribution amount under "Other contributions previously taxed by Massachusetts"

@bhim80

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supertech

This is very annoying and I have the same issue.

stoneyjeep

This comes under for what it is worth (FWIIW?)

I have posted before on the MA tax code with regards to Roths.

I read in the Federal Tax Code yesterday (Hat Tip to Mr. Caron, CPA) that if you your 1099 gives a T for a Roth that you know deserves a Q, "the preparer should use the Q designation".

This would save some time and effort of changing Ts to Qs when preparing the Massachusetts State Return.