Common questions about entering individual 1099-R Roth IRA contributions in Lacerte

In this article, you can find solutions to frequently asked questions about entering Roth IRA contributions in the Individual module of Lacerte. Since IRAs are calculated separately for the taxpayer and spouse, make sure to use the appropriate column for your entries.

Calculations and limitations addressed in this article may be impacted by inflation adjustments for the year. To see the IRS annual inflation adjustments for tax year 2023 and 2024 see here.

Follow these steps to enter Roth IRA contributions:

1. Go to Screen 24, Adjustments to Income.
2. Scroll down to the Roth IRA section.
3. Enter the Roth IRA contributions (1 = maximum) field.
   • Entering a "1" will calculate the maximum contribution according to the Roth IRA Contribution Worksheet contained in the Instructions for Form 8606.
   • If the client made Roth IRA contributions and later recharacterized part of the contribution, enter the total amount contributed, including the recharacterization, in this field.
4. Enter any Recharacterizations.
5. Enter the Contributions made (letter use only) field.
6. Scroll down to the Explanation of IRA Contributions Recharacterized section.
7. Enter any necessary explanations in Taxpayer (Ctrl+E) and Spouse (Ctrl+E) fields.
   • This is only necessary if you entered amounts in Recharacterizations from step 4.

Lacerte automatically compares the total contributions made to the contributions allowed and calculates any excess amount. If excess contributions exist, the program adds a paragraph to the client letter advising your client to withdraw the excess before the return due date to avoid potential penalties. If the return is filed on extension, Lacerte assumes the IRA contribution was made by the original due date and will not include the excess contribution paragraph in the client letter.

Follow these steps to enter the starting basis for a Roth IRA:

1. Go to Screen 24, Adjustments to Income.
2. Scroll down to the Roth IRA section.
3. Locate the Form 8606 (Part III) subsection.
   • This subsection is related to Form 8606, lines 19-25.
4. Enter the Basis in Roth IRA Contributions as of 12/31/2023.
   • The program prints a Roth IRA Basis Schedule with the Worksheets.
5. If the clients had a previous Roth IRA conversion, enter the appropriate amounts in Basis in Roth IRA Conversions as of 12/31/2023.
   • The program prints a Roth IRA Basis Schedule with the Worksheets.

If the client received a Roth IRA distribution during the current year, the basis entered will print on Form 8606, page 2, line 22 (or line 24 for conversions). If no Roth IRA distribution was received, page 2 won’t generate. Instead, Lacerte will retain the basis amount and carry it forward to next year, increasing it by any Roth IRA contributions or conversions made during the current year.

How do I enter the starting basis for a traditional IRA?

1. Go to Screen 24, Adjustments to Income.
2. Scroll down to the Traditional IRA section.
3. Locate the Form 8606 (Part I) subsection.
4. Enter the IRS basis for 2019 and earlier years.
   • If the client makes nondeductible contributions and receives IRA distributions in the current year, the program prints this amount on line 1 of the IRS Pub. 590 worksheet.