I am trying to understand how to report the recharacterization and conversion of excess Roth IRA contributions.
Here is an overview of the situation:
October 2019 - made $6000 contribution to my Roth IRA, and $6000 to my spouse's Roth
March 2020 - discovered we are over the income limit for Roth contributions. We recharacterized each contribution to a traditional IRA and converted each one back into a Roth; this process was completed before filing our taxes for 2019. However, we did NOT report the original Roth IRA contribution because we thought we "reversed it" and could therefore ignore it. We expected to report the recharacterization and conversion on our 2020 taxes.
Feb 2021 - We received 2 1099-Rs for the recharacterizations (one for me, one for my spouse), and 2 1099-Rs for the conversions.
For the recharacterizations, the 1099-Rs look like this:
Box 1- $6131.97 (me), $6006.32 (spouse)
2a- $0
4- $0
7- R
16- $6131.97 (me), $6006.32 (spouse)
For the conversions, the 1099-Rs look like this:
Box 1- $6158.03 (me), $6508.41 (spouse)
2a- $6158.03 (me), $6508.41 (spouse)
2b- taxable amt not determined (checked)
4- $0
7- 2; IRA/SEP/SIMPLE (checked)
16- $6158.03 (me), $6508.41 (spouse)
Our broker opened 2 traditional IRA accounts for the recharacterizations (we did not have one before this, so all of the money deposited was post-tax dollars), and the traditional IRAs had a value of $0 after the conversion.
I am having trouble figuring out how to report this series of transactions. As far as I can tell, none of this should be taxable or incur excess contribution penalties. However, the permutations I have tried in TurboTax have resulted in 1) taxes being withheld on post-tax dollars, or 2) a message saying that I owe penalties on the conversion amount that's above $6000. Any idea what I'm doing wrong? Also, will I need to amend my 2019 return to report the original Roth contribution, even though it was recharacterized?
Thanks for your help! Much appreciated!
