Hello,

I am completing my taxes using H&R BLock tax software and I had done a Backdoor Roth Conversion during calendar year 2023. I answered all the questions correctly but the software is not calculating the amount taxable correctly due to Box 10 rounding to 3 digits instead of 5 or 6 digits after the decimal point.

Here is my scenario:

Made a nondeductible IRA contribution of $6,500 to regular IRA. A few days later did the ROTH Conversion and the amount converted was $6,502. The $2 should be taxed. However the tax software is rounding up to 1 instead of the .999692 ($6,500/$6,502) for Box 10 of form 8606. Thus it is showing that the $2 is not taxable when it really should be.

Decisions:
1. I can override the Box 10 amount and put .999 (H&R Block will only go out 3 places) and then change the next box to the $6,500 and then mail in the return which then properly reports the $2 as taxable, or

2. Let the tax software handle it and not worry about the $2 difference as it will show as not being taxable. (Just worried that the IRS may see that $6,502 was converted and the $2 gain was not shown as taxable).

Also, this issue may compound every year that this happens with the FORM 8606 as this will be the 1st one I file so want to get it right.

Which way should I go in reporting this? (Just use the software and not report the $2 as taxable or override the amounts in Box 10 and 11 and then have to deal with mailing in the return each and every year I get a small taxable gain on the conversion,

I have heard that turbo tax carries out the decimal to 5 place which would result in a more accurate computation.

Decisions Decisions….