If you converted 30000 to a Roth IRA in 2018, can you still contribute 5500 to a ROTH IRA in the same yr? Proseries is treating the 5500 as an excess contribution.

[swongtax]

Proseries is taxing the excess contribution (after entering year end value of Roth IRA accounts $5500 ).

[Just-Lisa-Now-]

Do they have earned income to be able to contribute to a ROTH?

[itonewbie]

Also, what's the AGI and what filing status?

[swongtax]

yes

[swongtax]

Married Filing separate (husband AGI about 50K), taxpayer's self employed income 3372 ,rental passive income 10800, w-2 wage 111

[swongtax]

If I enter Year end value as $0 Form 5329 ROTH IRA VALUE AT year end SMART worksheet, the excess contribution tax is gone but excees contribution still says $5500.

[swongtax]

Thanks!  I looked this up, if MFS status living together MAGI under $10000 is reduced for ROTH IRA contribution, but Proseries treats 100% as excess, not even $10 contribution.  I called Proseries ,they think their program is correct.

[itonewbie]

Not sure if I follow you.  In your case, the MAGI is in excess of $10,000, based on the info you provided thus far.

[swongtax]

Passive income does not count as earned income

[swongtax]

OK, I take that back.  MAGI does include rental income.  So if MAGI is over $10000, this threshhold is met for ROTH IRA contribution for MSF status, the only problem is they are living together, and the program will not allow contribution unless I choose they are living apart.....why?

[itonewbie]

Whether they live together is not relevant.  If they do not live together, there'd be a different treatment.  You should know by now that the Code is not friendly toward MFS filers.

[itonewbie]

It's not the program, it's the tax code. If you want citation, take a look at §408A(c)(3).

[swongtax]

I read the code:  YOU ARE CORRECT!  MFS threshhold $10000 MAGI no contribution allowed.
But this does not explain why the Proseries program is allowing the ROTH contribution if I choose MFS and living apart all year.  The Proseries rep is saying the same thing.  Where are they interpreting this allowance from?  

[itonewbie]

Looks like you missed §408A(c)(3)(C).

[itonewbie · Accepted solution]

There you go.  The MAGI threshold for MFS is $10,000.  Your client is not eligible for Roth IRA contribution.

FWIW, Roth conversion does not affect the annual limit for Roth IRA contribution.