swongtax
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12-07-2019
04:58 AM
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Proseries is taxing the excess contribution (after entering year end value of Roth IRA accounts $5500 ).
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Just-Lisa-Now-
Level 15
12-07-2019
04:58 AM
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Do they have earned income to be able to contribute to a ROTH?
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itonewbie
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12-07-2019
04:58 AM
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Also, what's the AGI and what filing status?
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swongtax
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12-07-2019
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yes
swongtax
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12-07-2019
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Married Filing separate (husband AGI about 50K), taxpayer's self employed income 3372 ,rental passive income 10800, w-2 wage 111
swongtax
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12-07-2019
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If I enter Year end value as $0 Form 5329 ROTH IRA VALUE AT year end SMART worksheet, the excess contribution tax is gone but excees contribution still says $5500.
swongtax
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12-07-2019
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Thanks! I looked this up, if MFS status living together MAGI under $10000 is reduced for ROTH IRA contribution, but Proseries treats 100% as excess, not even $10 contribution. I called Proseries ,they think their program is correct.
itonewbie
Level 15
12-07-2019
04:58 AM
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Not sure if I follow you. In your case, the MAGI is in excess of $10,000, based on the info you provided thus far.
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swongtax
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12-07-2019
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Passive income does not count as earned income
swongtax
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12-07-2019
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OK, I take that back. MAGI does include rental income. So if MAGI is over $10000, this threshhold is met for ROTH IRA contribution for MSF status, the only problem is they are living together, and the program will not allow contribution unless I choose they are living apart.....why?
itonewbie
Level 15
12-07-2019
04:59 AM
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Whether they live together is not relevant. If they do not live together, there'd be a different treatment. You should know by now that the Code is not friendly toward MFS filers.
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itonewbie
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12-07-2019
04:59 AM
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It's not the program, it's the tax code. If you want citation, take a look at §408A(c)(3).
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swongtax
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12-07-2019
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I read the code: YOU ARE CORRECT! MFS threshhold $10000 MAGI no contribution allowed.
But this does not explain why the Proseries program is allowing the ROTH contribution if I choose MFS and living apart all year. The Proseries rep is saying the same thing. Where are they interpreting this allowance from?
But this does not explain why the Proseries program is allowing the ROTH contribution if I choose MFS and living apart all year. The Proseries rep is saying the same thing. Where are they interpreting this allowance from?
itonewbie
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12-07-2019
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Looks like you missed §408A(c)(3)(C).
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itonewbie
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12-07-2019
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There you go. The MAGI threshold for MFS is $10,000. Your client is not eligible for Roth IRA contribution.
FWIW, Roth conversion does not affect the annual limit for Roth IRA contribution.
FWIW, Roth conversion does not affect the annual limit for Roth IRA contribution.
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