@valataxman wrote:
Thanks for the response. I did report 6000 while doing my taxes for the year 2020. I do see 6000 reported as non-deductible IRA in Form 8606 in my 2020 Tax returns.
I would like to recharacterize as I know I can do it but since I contributed another 4000 towards 2021, I am not sure how to go about answering this question in my banks recharacterization request form: How much is the gain or loss attributable to the contribution?
My total IRA contribution is 10000 of which 6000 is for 2020, 4000 for 2021. So, Can I just enter 60 percent of my IRA account's gain towards 2020 contribution?
You have until the due date of the 2020 tax return to recharactorize (May 17, 2021 this year) or the extended due date (October 15, 2021) if you either filed an extension or filed your 2020 tax by May 17 (which gives you an automatic extension to recharactorize,)
The proper way to report the recharacterization and earnings which is to enter the 2020 IRA contribution in the IRA contribution interview section and then say yes to "Did you switch from a Roth to a Traditional IRA - recharacterize".
The amount The amount of the original Roth contribution must be entered - not any earnings or losses.
Then TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharactorized.
There is no tax or penalty on the before-tax earnings since the earning were simply switched into the recharactorized account.
The bank should issue you a 2021 1099-R with a box 7 code R.
This must be reported on an amended 2020 tax return.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
