Taxpayers who converted amounts to a Roth IRA or designated Roth account in 2010 must report half of the resulting taxable income on their 2012 returns.
Normally, Roth conversions are taxable in the year the conversion occurs. For example, the taxable amount from a 2012 conversion must be included in full on a 2012 return. But under a special rule that applied only to 2010 conversions, taxpayers generally include half the taxable amount in their income for 2011 and half for 2012, unless they chose to include all of it in income on their 2010 return (filed in 2011).
Roth conversions in 2010 from traditional IRAs must be reported on either Form 1040 or Form 1040A. Conversions from workplace retirement plans, including in-plan rollovers to designated Roth accounts, should also be reported on either Form 1040 or Form 1040A.
Taxpayers who also received Roth distributions in either 2010 or 2011 may be able to report a smaller taxable amount for 2012.
Taxpayers who made Roth conversions in 2012, or are planning to do so in 2013 or later years must file Form 8606 to report the conversion. As in 2010 and 2011, income limits no longer apply to Roth IRA conversions.
If you need assistance reporting Roth rollovers and conversions that you've made in previous tax years, don't hesitate to call us. We're here to help!
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Everett, WA 98201 Federal Way, WA 98003
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