Retirement tax questions


@todd68 wrote:

For 2018 excess, I paid the 6% last year and expected to pay if for 2019 as well. How do I show that it has been removed? 

 

For the 2019 excess, I moved the money from the Roth to Traditional back to Roth with the help of Vanguard. 


You remove it form the IRA contribution section in 2021 when you do your 2020 tax return.  You do nt remove it now because it was NOT removed before the end of 2019.

 

 

The proper way to report the recharacterization and earnings which is to enter the 2019 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.

 

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

 

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

 

Since the after-tax Roth contribution is now a Traditional IRA contribution it can be either a before-tax deduction if your MAGI allows a deduction which might result in an additional 2019 refund, or it will be an after-tax contribution reported on a 8606 form (line 1 & 14) as a "basis" in the Traditional IRA that will reduce the tax of future distributions.

 

**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.**