Preparing taxes.
In 2023, had taken out some money from IRA and also contributed to Roth IRA. Realize over-contributed to Roth and thinking of doing a recharacterization to IRA for 2023.
If I recharacterize, it would be non-deductible IRA contribution (because of income level). Trying things out in TurboTax to see what happens if I report a re-characterization.
It seems the taxable portion of the IRA distribution is reduced. 😳
Looking deeper, it seems
1) recharacterized money becomes non-deductible IRA contribution for 2023。 reported in 8606 line 1.
2) I had taken out IRA money in 2023, so there is IRA distribution
3) then seems to use 8606 / pub 590-b worksheet to figure out the taxable portion of IRA distribution.
Seems non-deductible IRA contribution (from recharacterization) partially reduces taxable portion of IRA distribution
Just very surprised from what I am seeing in TurboTax. Want to ask some experts here if what I am seeing is legit. Doing my research.
