How to report a conversion of a Traditional IRA to a Roth IRA in Lacerte

Follow these steps to enter a Traditional IRA converted to a Roth IRA:

1. Go to Screen 13.1, Pensions, IRAss, (1099-R).
2. Complete the Payer Information section.
3. Enter the full distribution (conversion and recharacterization amount) in Gross Distribution.
4. Enter the Taxable Amount.
5. Select the box, IRA/SEP/SIMPLE.
6. Scroll down to the Form 8606 section.
7. Enter the Value of all traditional/SEP/SIMPLE IRAs at 12/31/XX (plus outstanding rollovers) (-1=none). This amount prints on Form 8606, Line 6.
   • Enter the total value of all the taxpayer's traditional/SEP/SIMPLE IRAs (not just this one) as of December 31, plus any amount distributed to the taxpayer from one traditional/SEP/SIMPLE IRA within 60 days before the end of the year (November 2 to December 31) that was rolled over to another traditional/SEP/SIMPLE IRA after December 31, but within the 60-day rollover period.
   • If the taxpayer has a current year distribution, the program uses this entry to calculate the taxable part on Form 8606. Make this entry only once for the taxpayer and once for the spouse (if applicable). The amount entered prints on Form 8606, Line 6.
8. Locate the Conversions to Roth IRA subsection.
9. Enter the total amount being converted to a Roth IRA in, Traditional/SEP/SIMPLE IRA distributions converted to Roth IRA. This amount prints on Form 8606, Line 8.
10. Go to Screen 24, Adjustments to Income.
11. Locate the Traditional IRA section.
12. Locate the Form 8606 (Part I) subsection.
13. Enter the IRA basis for 20XX and earlier years. This amount will print on Form 8606, Line 2.
    • Enter in the respective input fields the taxpayer's and spouse's basis in IRA(s) for [first prior tax year] and prior years. This should be the amount from the taxpayer's and spouse's [prior tax year] Form 8606, Line 14.

Once all applicable entries are made, go to the Forms tab to view Form 8606. Any taxable amount with show on 8606 (page 2), Part II, Line 18.

See Publication 590 Individual Retirement Arrangements (IRAs) for more information.