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Properly reporting a Roth IRA recharacterization to a traditional IRA
I made a contribution of $4718 to my Roth IRA but a month later I recharacterized that to a Traditional IRA (due to income restrictions); it had grew in value but I forget by how much (and my brokerage account activity log does not specify). I then made an additional contribution of $1282 to my Traditional IRA (to make the max IRA contribution of $6000 for the year).
After these contributions, I did a backdoor Roth by converting all my Traditional IRA (valued at $7034.21 at that point) to a Roth IRA. My question is how do I enter these numbers correctly into TurboTax?
Here are my tax forms numbers:
Traditional IRA Form 5498:
1.) IRA Contributions: $1,282.00
4.) Recharacterized Contributions: $5,681.40
5.) Fair market value of account: $0.00
7.) IRA Type: IRA
Roth IRA Form 5498:
3.) Roth IRA conversion amount: $7,034.21
7.) IRA type: ROTH IRA
10.) Roth IRA contributions: $4,718.00
Traditional IRA 1099:
1.) Gross Distribution: $7,034.21
2a.) Taxable amount: $7,034.21
7.) Distribution Code: 2
Roth IRA 1099:
1.) Gross Distribution: $5,681.40
2a.) Taxable amount: $0.00
7.) Distribution Code: N
Here's what I did. I first entered my 1099-Rs:
Personal Income -->
Choose what I want to work on -->
Retirement Plans and Social Security -->
IRA, 401(k), Pension Plans (1099-R) -->
Did you receive any 1099-R forms? Yes -->
Tell us which 1099-R you have: Form 1099-R-->
For my Traditional IRA 1099-R, I entered these numbers:
1.) Gross Distribution: $7034.21
2a.) Taxable Amount: $7034.21
2b.) Checked box "Taxable amount not determined"
3.) Capital Gain: $0
4.) Federal Income Tax Withheld: $0
5.) Employee Contributions etc.: $0
6.) Net Unrealized Appreciation: $0
7.) Select code that matches Box 7 on 1099-R: "2-Early Distribution (except Roth IRA)"
8-12.) Blank
- GOOD NEWS: YOU DON'T OWE EXTRA TAX ON THIS MONEY
- WHAT DID YOU DO WITH THE MONEY?
- Checked "moved the money to another retirement account"
- Checked "did a combination of rolling over, converting, or cashing out the money"
- Amount converted to a Roth IRA account: $7034.21
For my Roth IRA 1099-R I entered these numbers:
1.) Gross Distribution: $5681.40
2a.) Taxable Amount: $0
2b.) No boxes checked
3.) Capital Gain: $0
4.) Federal Income Tax Withheld: $0
5.) Employee Contributions etc.: $0
6.) Net Unrealized Appreciation: $0
7.) Select code that matches Box 7 on 1099-R: "N-Recharacterized IRA contribution made"; IRA/SEP/SIMPLE box is NOT checked
8-12.) Blank
- WAS PATRICK EMPLOYED AS A PUBLIC SAFETY OFFICER: No
- DID YOU TAKE ANY DISASTER DISTRIBUTIONS? No
- ANY NONDEDUCTIBLE CONTRIBUTIONS TO PATRICK'S IRA? No
- TELL US THE VALUE OF YOUR TRADITIONAL IRA: On Dec 31, 2020: $0
- EXPLAIN YOUR RECHARACTERIZATION:
Date of the Original Contribution: 04/06/2020
Date of the Recharacterization: 05/01/2020
The Amount Recharacterized: $4718.
The Amount Transferred (Recharacterization plus earnings or losses): $5681.40
Then I entered my Form 5498s:
Deductions & Credits -->
Choose what I want to work on -->
Retirements and Investments --> Traditional and Roth IRA Contributions --> Check both Traditional IRA and Roth IRA boxes:
- IS THIS A REPAYMENT OF A RETIREMENT DISTRIBUTION? No
- TELL US HOW MUCH YOU CONTRIBUTED:
- Total 2020 traditional IRA contributions: $1282
- How much contributed between Jan 1, 2021 to April 15, 2021: $0
- TELL US HOW MUCH YOU TRANSFERRED:
- Amount switched from Traditional IRA to Roth IRA contribution: $0
- RETIREMENT PLAN COVERAGE: No
- ANY EXCESS IRA CONTRIBUTIONS BEFORE 2020? No
- ANY NONDEDUCTIBLE CONTRIBUTIONS TO PATRICK'S IRA? No
- TELL US THE VALUE OF ALL YOUR TRADITIONAL IRA ACCOUNTS on Dec 31 2020: $0
- ENTER YOUR ROTH IRA CONTRIBUTIONS: $4,718
- TELL US HOW MUCH YOU TRANSFERRED: $4,718
- ROTH IRA EXPLANATION STATMENT:
Date of the Original Contribution: 04/06/2020
Date of the Recharacterization: 05/01/2020
The Amount Recharacterized: $4718.
The Amount Transferred (Recharacterization plus earnings or losses): $5681.40
Reason for the Recharacterization: Made erroneous contribution to Roth IRA, meant to contribute to Traditional IRA.
- DID YOU OPEN A ROTH IRA BEFORE 2020? No
Sorry for the longwinded explanation, just trying to make it easier for someone to correct any mistakes I made without going through a whole step-by-step tutorial. Any help is obviously appreciated!