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!
" 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
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
Hello!
Thank you for your response! Greatly appreciate it.
In terms of recharacterization:
If I understand correctly, I need to file two forms:
A few follow-up questions:
Thank you so much for the insight!
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.
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.
Thank you!
What would make me ineligible to make Traditional IRA contributions?
You must have earned income in 2022 at least as much as the contribution you wish to make.