Retirement tax questions

Yes, you can amend your 2019 return to report the excess contribution. Please see How do I amend a 2019 return in TurboTax? for instructions. You will enter the Roth IRA contribution and TurboTax will calculate the 6% penalty on Form 5329 on the 2019 tax return.

You will have to pay the 6% penalty on the 2019 excess contribution on the 2020 tax return since this excess contribution was not withdrawn by December 31, 2020. When TurboTax asks if you had any prior excess contributions in the IRA contribution section you will enter the 2019 amount and TurboTax will calculate the penalty on Form 5329.

You will have to request to withdraw the 2019 excess contribution amount as a regular distribution before December 31, 2021 to avoid future penalties (no need to withdraw the earnings because it is after the due date of the 2019 return).

Please follow these steps to enter the recharacterization on your 2020 tax return (you will repeat this on your 2021 tax return):

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 (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 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 and you only get a screen say $0 is deductible)

You will get a 1099-R 2021 will be for the recharacterization with code R-Recharacterized IRA contribution made for 2020 and this belongs on the 2020 return. But a 1099-R with code R will do nothing to your return. You can only report it as mentioned above.

The second 1099-R 2021 will have a code N Recharacterized IRA contribution made for 2021 and this belongs on the 2021 return.  You will still have to report it as mentioned above.

If you need more help then you can also use a TurboTax Live Expert. Please see What is TurboTax Live?