Is my 1099-R correct for Roth conversion? Taxable vs non-taxable amounts

The 1099-R itself isn't necessarily wrong, but you do need to account for your non-deductible contributions using Form 8606. This form is how you track the "basis" (already-taxed money) in your Traditional IRA. When you do a Roth conversion, the 1099-R will typically show the full distribution amount in Box 1 and Box 2a because the financial institution doesn't track which portions were pre-tax vs. after-tax. It's your responsibility to report this correctly on your tax return. In TurboTax, when you enter the 1099-R, there should be a section where it asks about non-deductible contributions or your "basis" in the IRA. Make sure you enter the total of your after-tax contributions ($8,000 + $4,700 = $12,700 in your case). TurboTax should then automatically fill out Form 8606 to calculate the taxable portion of your conversion. If TurboTax isn't asking about this, look for a section about "IRA Basis" or "Non-deductible IRA contributions" in the program. You might need to search for it specifically.

Hey there! I went through almost the exact same situation last year and found a great solution. I was pulling my hair out with TurboTax until I discovered taxr.ai (https://taxr.ai). It specifically helped me parse through my complex Roth conversion situation. You upload your tax documents, and it identifies issues like this - distinguishing between pre-tax and after-tax contributions in conversions. The tool actually flagged my 1099-R and walked me through how to properly allocate the basis amounts on Form 8606. It saved me from accidentally paying taxes on money that was already taxed! I was honestly surprised at how it caught the nuances of IRA basis tracking that TurboTax seemed to bury deep in their interview process. Might be worth checking out if you're still struggling.

Just wanted to update after trying taxr.ai that the previous commenter suggested. It was actually super helpful for my Roth conversion situation! I uploaded my 1099-R and previous year's returns, and it immediately flagged that I had non-deductible contributions that weren't being tracked correctly in TurboTax. The tool showed me exactly where in TurboTax to enter my basis information (which was buried in some obscure menu I never would have found). Once I did that, Form 8606 was generated correctly and my tax bill dropped by over $3,000 since it properly accounted for the after-tax money I'd already contributed. For anyone dealing with these complicated IRA conversion scenarios, having something double-check your work is definitely worth it. Won't go back to doing these conversions without a second set of eyes!

OP, I had almost the identical situation last year. After spending hours on hold with the IRS trying to get clarification (seriously, like 3+ hours each time I called), I found Claimyr (https://claimyr.com). They got me connected to an actual IRS agent in about 20 minutes who walked me through exactly how to handle my 1099-R and Form 8606. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that the 1099-R looks correct as issued by your financial institution. What matters is that YOU properly account for your basis with Form 8606. The agent explained that financial institutions don't track your basis - that's why Box 2b is checked as "taxable amount not determined." Honestly, getting that direct confirmation from the IRS gave me the confidence to file correctly and not overpay thousands in taxes.

I was completely wrong about Claimyr. After my last comment, I was desperate enough to try it since I had questions about my own 1099-R issues that weren't getting resolved. To my genuine shock, I got a call back within 25 minutes connecting me to an actual IRS representative. The agent spent almost 30 minutes with me going through my specific situation with pre-tax and after-tax IRA contributions. They confirmed exactly what others here have said - that I needed to complete Form 8606 to properly account for my basis, regardless of what the 1099-R showed. For anyone struggling with these IRA basis questions, getting direct guidance from the IRS itself was incredibly helpful. I've been filing incorrectly for years and potentially overpaying. This will save me a lot in taxes going forward.

One thing nobody has mentioned yet - you need to be careful about the pro-rata rule. When you convert an IRA that has both pre-tax and after-tax money, you can't just convert the after-tax portion first to avoid taxes. The IRS views all your IRAs as one pot of money. The formula is: (Your after-tax contributions ÷ Total IRA balance) × Conversion amount = Non-taxable portion So with your numbers: $12,700 (after-tax) ÷ $20,300 (total) × $20,300 (converted) = $12,700 non-taxable The remaining $7,600 would be taxable. This is what Form 8606 calculates. Make sure TurboTax is calculating this correctly. Look for line 18 on Form 8606 in your tax return to see the taxable amount.

Don't forget about state taxes too! Depending on your state, you might need to file additional forms to properly report your Roth conversion with the correct taxable amount. Some states don't automatically import the federal Form 8606 calculations, so you could end up paying state tax on the entire conversion amount if you're not careful. I made this mistake last year and had to file an amended state return.

This is exactly the kind of complex tax situation where having professional guidance really pays off. Your 1099-R is actually correct - financial institutions are required to report the full distribution amount because they don't track your basis (after-tax contributions). The key is Form 8606, which calculates the taxable vs. non-taxable portions using the pro-rata rule that Noah mentioned. Based on your numbers, you should only owe taxes on about $7,600 of the $20,300 conversion. A few important reminders: 1. Make sure you have documentation of all your non-deductible contributions ($8,000 + $4,700) 2. TurboTax should ask about IRA basis when you enter the 1099-R - if it doesn't, search for "non-deductible IRA contributions" 3. Double-check that Form 8606 is generated and shows the correct basis amount 4. Don't forget about state tax implications If you're still having trouble getting TurboTax to recognize your basis, you might want to consider consulting a tax professional for this year, especially given the complexity of your situation with multiple types of contributions and the recharacterization.

Your question about documentation is spot-on - this is crucial for IRA basis tracking! Here's what you should definitely keep: **Essential Documentation:** - All tax returns with Form 8606 (these are your primary proof of basis) - Form 5498 from your IRA custodian showing contributions for each year - Any correspondence about recharacterizations or rollovers - Records of any distributions that reduced your basis **Good to Have:** - Bank statements showing IRA contributions (not strictly necessary but helpful) - Investment statements showing account values at year-end - Any worksheets you used to calculate basis The IRS generally accepts your filed Form 8606 as proof of basis unless they have reason to question it. Your old tax returns are usually sufficient documentation. Regarding audits on Roth conversions - they're relatively uncommon unless there are red flags like missing Forms 8606 or inconsistent reporting across years. If audited, the IRS typically wants to see: 1. Your basis calculation (Form 8606 history) 2. Proof of the non-deductible contributions (Form 5498s) 3. Documentation of the conversion transaction itself With your $3K non-deductible and $2K pre-tax situation, you'd only owe taxes on $1,200 of a full $5K conversion using the pro-rata rule. Make sure to file Form 8606 this year to establish your basis properly!