Thank you for any help you can provide.
The code is R....For a little more background In 2017 I made contributions to a ROTH IRA. In Jan 2018 I recharacterized those to a traditional IRA when I realized my income was too high to invest in a ROTH. Because I had not yet filed my 2017 taxes, this recharacterization was annotated on my tax return. Now I receive 1099-R and Turbo Tax says I ‘MAY’ need to amend my 2017 return. So two questions, do I need to amend my 2017 return? And why doesn’t turbo tax know if I need to since I filed with turbo tax last year??
If you have already included this recharacterization on you 2017 return then you do not need to amend the return, but if you haven't included it then you will have to file the amendment for 2017.
Some of the phrases used in TurboTax are more general use that's why it used the phrase "may".
In addition if you already did the following on your 2017 return you can ignore the 1099-R:
A 2018 1099-R with a code R in box 7 (Recharacterized IRA contribution made for 2017 and recharactorized in 2018) will tell you that you must amend 2017.
A code R 1099-R does nothing whatsoever if entered into the 1099-R section of an amended 2017 return. It does not get sent to the IRS and nothing goes on the tax return at all. The only purpose of the 1099-R is to report the recharacterization to the IRS, but it still must be reported on your 2017 tax return.
The box 1 on the 1099-R will report the total recharacterized amount (contribution plus earnings) but it does not separately report the earnings and box 2a must be zero.
The proper way to report the recharacterization and earnings which is to enter the 2017 IRA contribution in the IRA contribution interview section and then say yes to "Did you switch from a Roth to a Traditional IRA - recharacterize".
The amount The amount of the original Roth contribution must be entered - not any earnings or losses.
Then TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharactorized.
There is no tax or penalty on the before-tax earnings since the earning were simply switched into the recharactorized account.
That is the only way to prepare and attach the proper line 15a explanation statement for a code R 1099-R.
Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.
OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.
Since the after-tax Roth contribution is now a Traditional IRA contribution it can be either a before-tax deduction if your MAGI allows a deduction which might result in an additional 2017 refund, or it will be an after-tax contribution reported on a 8606 form (line 1 & 14) as a "basis" in the Traditional IRA that will reduce the tax of future distributions.