Category: Tax Questions
Converting a Traditional IRA to Roth IRA
Traditional Individual Retirement Agreements (IRAs) can be converted to a Roth IRA, however these conversions are taxable transfers. In order to report a conversion, the taxpayer will be issued Form 1099-R showing the total distribution made from their Traditional IRA account. The full distribution does not need to be converted to a Roth IRA, however, any amounts not converted are subject to additional taxes and penalties. Conversions must be reported on Form 8606, Part II. Form 1099-R must be entered into the tax program before computing the taxable amount on Form 8606.
To display instructions for entering conversions in the tax program click here.
From the Main Menu of the Tax Return (Form 1040) select:
- Nondeductible IRAs - Select Taxpayer or Spouse
- Traditional IRAs
NOTE: For a conversion only, the only line that needs to be filled in is Net amount of traditional IRAs converted to Roth IRAs.
- Once you've entered the amount that was converted, Exit one menu to the Taxpayer's Form 8606 Menu
- Select Conversions from Traditional to Roth IRAs (Line 1 is pulled forward from Part I of the Form 8606)
NOTE: Any amount that is considered 'taxable' must be entered on Form 1099-R in the income menu. If the taxable amount is not entered on Form 1099-R, it will not be carried to Form 1040.
NOTE: This is a guide on entering conversions into the TaxSlayer Pro program. This is not intended as tax advice. For additional information refer to the Additional Links below.
Instructions for Form 8606, Nondeductible IRAs
Publication 590-A, Individual Retirement Arrangements (IRAs)
Tax Topic 451, Individual Retirement Arrangements (IRAs)
Last Updated: 3/22/2018