Retirement tax questions

To clarify, you took the excess contribution and earnings out on 3/3/2020 and therefore told your bank to withdraw excess contribution and earnings or did you tell the bank to recharacterize the Roth contribution to a traditional IRA? Because if you took the excess contribution and earnings out then there would be no 2020 Roth contribution to recharacterize. Or did you recontribute the whole amount again to the Roth before you recharacterized the amount as a traditional IRA? Or just made a new contribution to the traditional IRA? It might be best to check with your bank how they handled the situation.

To verify all the withdrawal, recharacterization and conversion happened in 2021 and not 2020? All dates were 2020?

No, you cannot reverse the conversion to put the money from the Roth back into the traditional IRA.

If you still had an excess contribution because you recontributed the amount withdrawn back to the Roth to be able to recharacterize it then if you leave it in your can pay the 6% penalty for 2020 and then apply it to next years contribution on your tax return. When you file your 2021 tax return TurboTax will ask if you had prior year excess contribution and if you want to apply it to 2021. 

The 24% tax will be carried over to line 25b on your 2021 return and will be credited to any tax due on your 2021 tax return.

To enter a recharacterization (you told the bank to switch a Roth contribution to a traditional contribution) please follow these steps to enter this in TurboTax:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions”
3. Click on “Jump to IRA contributions"
4. Select “Roth IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution
6. Enter the Roth contribution amount 
7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount $6,000 (no earnings or losses)
8. TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
9. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes"

If you did a withdrawal of excess contribution and earnings then you will get a 1099-R 2021 in 2022 which will have to be included on your 2020 tax return. This will report the earnings from the excess contribution. To create a 1099-R in your 2020 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2020?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2 enter the earnings
8. Box 7 enter P and J 
9. Click "Continue"
10. On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.