Retirement tax questions

You will enter the recharacterization when you enter the contribution to the Roth IRA:

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” for both of you
5. Answer “No” to “Is This a Repayment of a Retirement Distribution
6. Enter your husbands Roth contribution amount of $7,000
7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount of $7,000 (no earnings or losses)
8. TurboTax will ask for an explanation statement where it should be stated that the original $7,000 plus $1,175.17 earnings were recharacterized.
9. Answer “No” to “Is This a Repayment of a Retirement Distribution
10. Enter your Roth contribution amount of $6,000
11. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount of $6,000 (no earnings or losses)
12. TurboTax will ask for an explanation statement where it should be stated that the original $6,000 minus $96.01  loss were recharacterized.
13. 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 automatically and you only get a screen saying $0 is deductible)

To enter your 1099-R you got for your recharacterization please follow the steps below. It will be only for information and not be taxable. You have to report the recharacterization as mentioned above.

The 2022 1099-R you will get in 2023 will be for the recharacterization with code R-Recharacterized IRA contribution made for 2021 and this belongs on the 2021 return. But a 1099-R with code R will do nothing to your return. You can only report it as mentioned above. Therefore, you can ignore the 1099-R with code R when you get it in 2023. The box 1 on the 1099-R will report the total recharacterized amount (contribution plus earnings) but it does not separately report the earnings and box 2a must be zero.