Question

Traditional to Roth Conversion

Forum|Forum|2 years ago
January 16, 2024
2 replies
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I converted $100k from my traditional IRA to my Roth IRA in 2023. I know I owe taxes on this money as most is non-deductible, but when I go through the Turbo Tax Easy Step (1099-R), it appears that is adds the $100k I've converted as income (which I expected), but then when I select this money as converting to a Roth, it adds it again to my state income, increasing my state (Alabama) income by $200k. With Alabama State Tax at 5%, I'm now paying 10% on this conversion. Isn't this double taxing me on the same money?

SteamTrain

Employee

OK...here's one thing that might be affecting it.

The majority of Alabama forms are not scheduled to be ready until after the 18th of January.

After you update your software on the 19th...if it still is an issue, then contact TTX Customer Support (CS) to report the error....and let CS work thru it with you to see if ther is some user entry error, or a real software issue....

IF you attempt to report it before then, they likely can't do anything since the final AL forms haven't been installed.

Here's the link to get a phone number for Customer Support when you do call:

What is the TurboTax phone number? (intuit.com)

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

A

ALRoth

Did you get a resolution? As of February 18th, it has not been corrected.

J

JJW16Author

Yes, when you enter the data on the federal form (1099-R) for a traditional to Roth conversion, it will compute the federal taxes correctly, however, the taxable amount you convert AND the amount you roll-over to a Roth are both imported into the State (Alabama) tax form as reported income, thereby doubling the amount. You need to go to your State Tax section and under menu selection of Income, then Retirement Distributions, it will take you to a screen that says that “Some or All of Your Distribution is Taxable”. Both blocks may be filled in due to you answering the 1099-R questions on your federal return. However, it is a one “OR" the other option, and you need to manually decide which one is more appropriate for your situation. By deleting the value in one of these blocks, your State Income should now be correct.