Thanks macuser_22.
Just saw the Taxable IRA distribution sheet and it has the following. At the bottom of this post is what I answered to different questions on Turbo tax.
- Line 4- 6000 - in reply to the question on 'Value of all Traditional IRA as on 31 dec 2020' I replied as zero for value of traditional IRA and 6000 for outstanding recharacterizations as suggested on this post. Are these right? I only had Roth contributions at the end of 2020- 11590 from my conversion in Feb 2020 and 6000 from my new Roth contribution in 2020 done in Mar 2020 (which I recharacterized in Mar 2021 because that 2020 Roth contribution was a mistake), so a total of 17590.
- Line 6- 11590
- Line 7- 17590
- Line 8- .68221
- Line 9- 7907 - which is 11590* .68221. This does not seem correct as this should be 12000 (for my non T-IRA deductible part from 2019 and 2020)
- Line 12- 3683
"If you converted the entire Traditional IRA to a Roth so tat no Traditional IRA existed at the end of 2020 then line 14 should be zero and the taxable amount would be the total 1099-R box 1 minus $12,000."
My response - I do not know how to interpret this- as i said above I had no traditional IRA as of Dec 2020 but I recharacterized my 2020 Roth IRA to T-IRA and then converted it back to Roth in Mar 2021.
"Line 14 suggests that you entered a non zero 2020 year end value that would be in the above mentioned worksheet line 4."
My response - As per above I am not sure what I should put as year end value. I entered 0 for the T-IRA value and 6000 as outstanding recharacterizations.
Here is what I did on the questionnaire :
Here is what I did:
1. Went to my form 1099-R which was uploaded through my brokerage account and just checked it again
2. What did you do with the money- i replied "I moved it to another retirement account' and did a combination of rollover, converted etc and the Amount moved to Roth = 11590
3. Put money in HSA- No
4. Withdrawal due to Covid- No
5. Hit Continue
6. Did you take any disaster distribution- no
7. Any non deductible IRA contribution - YES (this is for previous year)
8. Total basis as of Dec 31, 2019- 6000. Is this correct? As this changes my tax amount. I think this is my basis for the 2019 non deductible IRA.
9. Value of all Traditional IRAs as on 31 Dec 2020 - 0 because I had no traditional IRAs. But not sure if my 2020 contribution to Roth (by mistake) and its recharacterization has a role to play here. IS this correct?
10. Let us see if we can reduce your early withdrawal penalty
11. Explain Garima's recharacterization- I did that.
Eventually I think and I may be wrong, that all of my deductible IRA conversion to Roth in Feb 2020 should be taxable, so the taxable amount should just be 5590. I do not know what impact the recharacterization would have on Part 1 of 8606. And what should it show in Line 1, 2 and 13.
Thanks for all your guidance and patience.
