DanielV01
Expert Alumni

Retirement tax questions

Enter in your 1099-R figures for the two 1099-Rs that have codes N and R reported.  This will allow TurboTax to appropriately account for those amounts, but they will not be taxable distributions (since they are recharacterizations to a nondeductible TIRA).  But this information assists in determining basis to determine how much the conversion itself is taxable.  Then, with the 1099-R with a box code of 2, carefully follow the directions below:

  1. Enter in the information as reported on the 1099-R for this IRA in the main portion of the screen.  Even though box 2a has an amount, the box "taxable amount not determined" should be checked, and box 7 probably has a code 2.  Make sure you enter your 1099-R as you have received it.  Hit Continue.
  2. Next screen says Good News: You Don't Owe Extra Tax on This Money (this means there's no penalty, but the income still needs to be reported correctly to be removed from taxable income).  Hit Continue.
  3. Next screen:  Did You Inherit the IRA from This Payer?  Probably No.  Hit Continue.
  4. The next screen asks:  What Did You Do With The Money From This Payer?  First, select I moved the money...and then I converted all of this money to a Roth IRA account.
  5. After a few screens relating to Disaster Payments, you come to a screen asking Any Nondeductible Contributions to Your IRA? Click YES and Continue.  
  6. Enter how much was your total Basis on December 31, 2017.  This is the amount of total nondeductible contributions you've made throughout the years.  This information is on Form 8606 from your 2017 tax return. (In your case, it is the $6500 reported with your 2017 recharacterization.  That amount will be excluded from taxable income, and the growth on the recharacterized TIRA will be included. 

You will still have a few questions after this, but you will see the portion of your distribution that was from your nondeductible contributions will have been excluded from your taxable income.

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