The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Converted Just One of Two IRAs to a Roth||Date: 6/26/2013 11:46 AM|
|Author: vkg||Number: 118752 of 120800|
Yes. It is a pro-ration on the cost basis. From what I understood, I would continue to be taxed yearly until there was no longer a second IRA even if I made no further conversions.
"Cost basis" is where I think I had stumbled. I guess the problem should not apply to me as both my IRA's have only nondeductible contributions made to them.
If you have no nondeductible contributions, then there is no basis to pro-rate.
If you hadn't undone the conversion, TT should have calculated taxes due on the converted amount for the current tax year. The additional taxes could have created an under withholding penalty. Taxes for a conversion are for only the current year. There is an annual penalty for over-contribution, but that doesn't apply to conversions.
I use H&R Block, and haven't use TT in a few years. Both have the issue that once a question is answered incorrectly, it can be very difficult to fix. Starting a new return is often easier than trying to untangle a wrong answer.
2012 is over. You need to generate a return that properly reflects the conversion and its reversal.
Taxes for a ROTH conversion are no different whether you have one or several IRAs. TT allows entering of individual accounts for your convenience. If you really believe it is a problem with TT handling multiple IRAs, you could test that by just entering the total value of your IRAs as one IRA.
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