@lemonwater wrote:
When I did my tax return in 2019, I reported my $1000 contribution to the Roth IRA and then reported my reasoning for recharacterizing it to a deductible traditional IRA. Note: The amount after growth was $1104. I believe that I reported that correctly, but am reentering it (again) in my 2020 taxes as the corresponding 1099-R has 2020 written on it since this recharacterization happened in February 2020. I then added $5000 more to the non-deductible Traditional IRA. (To hit the $6000 max.) in early March 2020. Then, in early April I "Backdoor Roth'd" the total balance over to my Roth IRA. (The balance was valued at $6019 at that time. This is the ALL the money that I had in my traditional IRA. I had never contributed to it before and it had no deductible contributions inside the account, only non-deductible contributions. I have no other traditional IRA account.) I also got a 1099-R showing this transaction from Traditional IRA to Roth IRA in 2020.
I put both of those 1099-R forms into Turbo Tax.
- The first 1099-R for the $1000 recharacterization results in a message saying that I "may" need to amend my 2019 return. (1) Do you know why I am getting this feedback?
- The second form shows the total from this "backdoor roth" on my 1040 Line 4a as expected, but the taxable amount on 1040 Line 4b is ~$5024 instead of the expected $19 (the growth on the total $6000 non-deductible IRA contribution). Do you know why? How do I get it to show $19 instead?
Other possibly relevant information: I over contributed $5500 in 2018 to my Roth but didn't know about recharacterization at the time and had it all moved to a brokerage account in Mar. 2019. This doesn't show up on my 2018 tax return since it was corrected in time. I accidentally reported this $5500 as still being in my account on my 2019 tax return and thus need to amend my 2019 return to show that I had removed the $5500 before the deadline in spring 2019. I will be refunded $330 when this goes thru. I haven't yet summited this amendment. This $330 shows up on my 2020 1040 preview as well (Schedule 2 Line 6). Not sure how to get rid of it either. Maybe the mess up in my 2019 return is causing the problems with Turbo Tax in my 2020 return?
Note: I've contacted Turbo Tax live about this twice and haven't gotten a helpful response either time. The last person said the $5024 taxable was because of my K-1 form, but I have no K-1 form (and after a quick google, I shouldn't have one.)
A 2019 contribution recharacterization is only reported in the 2019 tax return and does not go on the 2020 return at all. The 1099-R code R for the recharacterization should be ignored since it only tells the IRS about the recharacterization but you report it in the IRA contribution sections as you seemed to have done.
The "additional $5,000" - if that was a 2019 contribution made in 2020 for 2019 then that must be entered into the 2019 IRA contribution interview also as a non-deductible contribution that would go on the 2019 8606 form line 1 along with the $1,000 that was recharactorized for a total of $5,000.
If the $5,000 was a 2020 contribution then it gets entered the same way on the 2020 tax return which will put it on the 2020 8606 line 1 - with the carry forward 2019 contribution on line 2 for the total $6,000 on line 3.
It sounds like the $5,000 was never entered for either year.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
