Message Font: Serif | Sans-Serif
No. of Recommendations: 0
erickopp writes:

In 1998 I converted my Traditional IRA to a Roth IRA. The converted amount is to be spread out over 4 years. I had HR Block prepare my tax return to assure that this conversion was taken care of correctly. My traditional IRA consisted of $2000 annual contributions from years 95,96,97. Of those years, only 1995 was tax deductible because in 1996 and 1997 I contributed also to my 401K program. So even despite explicitly telling the person at HR block all of this...I am being fully taxed on my entire rollover...somehow the $4000 "already taxed" contribution is being included on the amount that I have to pay taxes on for the 4 years. I don't know what to do? I spoke to an IRS guy on the phone after being on hold for 45 minutes...and he told me that HR block is responsible to adjust this it that simple? Or do I have to write a letter to the IRS to explain my situation. This will save me a tax bill on $4000.

I reply:

Welcome to the board! You are correct, of course, that your $4000 basis in your traditional IRA should not be taxed upon conversion to a Roth IRA. I don't know why H&R Block needs to be involved at all -- simply file a Form 1040X amendment to your 1998 return, and find someone competent to do your 1999 return (better yet, do it yourself, and save the money). Bear in mind, by the way, that only $1000 of the basis should have been excluded from taxation in 1998. Good luck! --Bob
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.