turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Reporting Recharacterization after Filling Taxes on April 2023

Hello Everyone, 

 

I filed my taxes via Turbo, and when filing, I learned that I had excess contributions in my Roth IRA for 2022 because of my new MAGI. I paid the penalty. From this process, I realized that the contribution I had made for 2023 would also be excess if I left it there, though it wasn't affecting me during this filing period, since this penalty was just for my 2022 contributions. 

 

After filing and digging for info, I decided to recharacterize the excess plus earnings of my 2022 Roth IRA contributions, into a traditional IRA to fix my 2023 tax file. My question is, what now? I paid my penalty during filing back in April, I've moved over the excess into a traditional IRA in July I believe (to be safe, I also recharacterized all of my contributions for my 2023  as well so I don't have to pay a penalty next time I file, in 2024).

 

Do I need to file a 1040X? Or just the 8060? What is confusing me is if I need to "correct" the RothIRA contribution piece or if I just need to report that I now have traditional IRa contributions. Any insight would be much appreciated! Thank you! 

x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

7 Replies

Reporting Recharacterization after Filling Taxes on April 2023

" it wasn't affecting me"

an excess contribution left in through 2023 would be penalized again for 6%

 

Since you recharacterized your Roth contribution, you have to amend yout 2022 tax return to

  • report the contribution to a traditional IRA
  • file a replacement 2022 Form 5329 retracting the 6% penalty.

 

When done correctly, you recharacterized your original contribution, the earnings go along for the ride into the second IRA.

For this situation, your amended Form 1040-X should be annotated as follows:

 

"Filed pursuant to section 301.9100-2" witten at the top of Form 1040-X

 

@jacquegarcia2019 

Reporting Recharacterization after Filling Taxes on April 2023

Hello! 


Thank you for your response! Greatly appreciate it.


In terms of recharacterization:

  • I've recharacterized all contributions made for 2022 that I thought would be in excess, going off of the amount amount I was charged. I did the process through vanguard, which I believe also recharacterizes earnings.
  • I've done the same for ALL of the contributions for 2023, since if I had a penalty for my 2022 contributions then for sure I no longer qualify to make ANY contributions for 2023.
  • I moved it all to a *new* Traditional IRA

If I understand correctly, I need to file two forms: 

  • Form 1040X
  • Form  5329 (??) unsure if I need to file this, or this happens automatically through filing the 1040X...

A few follow-up questions: 

  • The deadline to file these is October 15th, correct? I believe 1040X can be filed via TurboTax. I am not sure if this applies to Form 5329
  • For reporting 1040X, on Turbo, I just need to *add* the contributions made into the Traditional IRA correct? I do not need to change anything regarding the Roth IRA? 

Thank you so much for the insight! 

Reporting Recharacterization after Filling Taxes on April 2023

Attach  a changed Form 5329 to Form 1040-X and send them together.

put -0- in Form 5329 Part IV lines 18 and 25. You don't owe that any more.

Form 1040-X line 10 column B should show the original penalty negated.

 

If eligible, you have to decide whether to take a deduction for your Traditional IRA.

If No, or not eligible,  Form 8606 would be a new form attached to 1040-X.


This all assumes you are allowed to make a Traditional IRA contribution also.

 

As always, use Part III Explanation to tell the IRS what you did.

 

@jacquegarcia2019 

 

 

 

Reporting Recharacterization after Filling Taxes on April 2023

Do not include your old 1040 nor your revised 1040 because the Form 1040-X reflects any changes there and becomes your new tax return.

 

@jacquegarcia2019 

Reporting Recharacterization after Filling Taxes on April 2023

Thank you! 

 

What would make me ineligible to make Traditional IRA contributions? 

Reporting Recharacterization after Filling Taxes on April 2023

 

Reporting Recharacterization after Filling Taxes on April 2023

You must have earned income in 2022 at least as much as the contribution you wish to make.

@jacquegarcia2019 

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies