Converting and re-characterizing are not the same thing and can have drastically different tax consequences. A back-door Roth IRA is done through the conversion of an already existing IRA. Re-characterizing your contribution is saying I changed my mind, I originally contributed to a regular IRA but now I want to make it a Roth contribution. It's a subtle difference, but a re-characterization will result in the system telling you that you were ineligible to make a Roth contribution if your income was too high and will have to pay a penalty.
To enter a contribution to an IRA, please use the following steps:
- In the Deductions & Credits section of your Federal return, scroll down to Retirement and Investments. Click Show More and click Revisit/Start next to Traditional and Roth IRA Contributions.
- If you converted to a Roth IRA, your original contribution was to a Traditional IRA. You then should have received a 1099-R for the conversion from a traditional IRA to a Roth IRA if you both made the contribution and the conversion in 2021. For a proper back-door Roth, you will want to select Traditional IRA.
- Select No to Is This a Repayment of a Retirement Distribution?
- Enter your contribution amount, making sure to put it in the appropriate box if you contributed in 2022.
- Select No to Did you change your mind? For more details on the differences between conversions and re-characterizations, you can click on the TurboTax help article.
- Navigate through the rest of the questions. This should be a Nondeductible contribution.
That will enter the contribution. As I mentioned earlier, if you converted it to a Roth in 2021, you should have received a 1099-R with the appropriate code and possibly a small taxable amount if there were any gains between your contribution date and the conversion date. This article walks you through entering the 1099-R into your tax return.
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