IRA Contribution Reducing Taxable Distribution

6 replies
44 views

Taxpayer is contributing to a traditional IRA despite being over the income limits to deduct it.

The Taxpayer also has IRA distributions in the same year via 1099-R.

ProSeries is going through the calculations and successfully determining that the contribution is not tax-deductible.

However, it is reducing the taxable portion of the IRA distribution. I believe it was a Roth conversion - can someone explain if this treatment is correct or if I am forgetting to click something in ProSeries?

ProSeries Professional

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Just-Lisa-Now-

Intuit Community Champion

Sounds like a back door ROTH.....non deductible IRA contribution is offsetting the IRA distribution that was converted to a ROTH.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

T

tccpg289Author

Level 5

Yes - I believe that is what is happening here.

How does the software "know" to reduce the taxable distribution from the Roth? Is this correct? Is it all based on the codes on the 1099-R?

qbteachmt

Level 15

"How does the software "know" to reduce the taxable distribution from the Roth?"

Have you confirmed all the dates are right?

Any nondeductible Trad IRA contribution is Basis. When you distribute or convert anything from Trad IRA, if there also is Basis, the distribution or conversion is Prorated for tax purposes.

Make sure everything is assigned to the proper year.

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