DIY Products

DIY Products

Whether you’re an experienced do-it-yourselfer or doing your own taxes for the first time, this is your place to learn and share. Here you’ll find information and resources for using H&R Block’s online and software DIY solutions. You’ll also find links to more information to assist you on your DIY journey.

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Pioneer
Posts: 2
Registered: ‎02-03-2016

Excess Roth contributions, program error

I contributed to a nondeductible IRA and immediately converted it to a Roth.  The online program keeps indicating that the whole contribution is excess. I know that there is no income limitation applicable to conversions of this type.  What's happening? I found this part of the program very confusing. When it asks about Roth contributions does that include the  conversion amount? Is the conversion also a traditional distribution? I've been a tax preparer for 20 years and have never found this so confusing.Alternately the program wa giving me a 10000 2% miscellaneous expense deduction for the previous 10000 in my IRA that I'd converted to a Roth years ago. I finally go rid of that but have no idea how. Help.

Tax Pro
Posts: 5,795
Registered: ‎02-23-2016

Re: Excess Roth contributions, program error

Hi Gwilson1173,

 

Welcome to the H&R Block community.

 

Your contributions are not excess, but when converting to a Roth account the rollover distribution (pre-tax contributions & earnings) is fully taxable because Roth account are funded only with after-tax dollars.

 

If the software is charging you a penalty then you did enter something incorrectly.

 

If you're using the online software then click on my name to send me a private message and let me know.  I'll run a scenario in whichever version you're using and figure this one out for you.

 

Louis,
Senior Tax Advisor (Tampa, FL)

Pioneer
Posts: 1
Registered: ‎11-25-2017

Re: Excess Roth contributions, calculation error

I have been having this problem for years and it is there in the 2017 version that just came out (Premium version of HR Block).  The software is not handling the basis of the IRA contribution that is nonrefundable (which is entered correctly during the interview) when converting to Roth the same year.  It then treats it as an extra contribution and adds a tax penalty. forms 8606 are not filled properly either, and the only solution I can find is to override the entries to correct the problem.  This prevents e-filing of course. HR Block is responsible for correcting this, or refunding the customers if they overpay taxes or are audited.

Associate (Pioneer)
Posts: 12
Registered: ‎01-20-2015

Re: Excess Roth contributions, calculation error

This is a complicated subject, and if the entries are not made exactly correctly, the program may not handle it correctly.  Here are a few suggestions based on mistakes I've seen over the years.

 

1)  Read every question carefully to make sure you understand them.

2)  Make sure you tell it you are doing a conversion.  It is not a recharacterization, or a rollover. 

3)  Do you have any deductible contributions in any of your IRAs that you are not converting.  If so, this will cause part of the conversion to be taxable.  Form 8606 will calculate the taxable part.

4)  You have to enter the contribution as a Traditional IRA, and enter nothing as a Roth contribution.  The program understands conversions and will properly handle it.

 

If you still have issues, take advantage of the live-chat with a tax expert when you're doing your taxes.  We open about the middle of January, and we'd be happy to walk you through it.  You can even upload your return to our secure server, and we can check that section to see what entry error you may have made.