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Get your taxes done using TurboTax
Yes, when you amend your 2020 tax return you will change the traditional contribution amount to $3,000 and will enter the $2,000 recharacterization when you enter the Roth IRA contribution. Yes, your basis at the end of 2020 will be $2,000, shown on line 14 of Form 8606. Please see the steps below:
- Login to your TurboTax Account
- Click on "Search" on the top right and type “IRA contributions”
- Click on “Jump to IRA contributions"
- Select “traditional IRA”
- Select “Roth IRA”
- Answer “No” to “Is This a Repayment of a Retirement Distribution
- Enter the traditional contribution amount of $3,000
- Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
- Continue until you get to the Roth IRA questions
- Answer “No” to “Is This a Repayment of a Retirement Distribution
- Enter the Roth contribution amount of $2,000
- Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount of $2,000 (no earnings or losses)
- TurboTax will ask for an explanation statement where it should be stated that the original $2,000 plus $xxx.xx earnings (or loss) were recharacterized.
- On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if you are thinking about doing a backdoor Roth. If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a screen saying $0 is deductible)
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March 1, 2022
6:19 AM