To verify, did you recharacterize your traditional IRA contribution as Roth IRA (nontaxable, code N in box 7 of your Form1099-R) or did you convert funds from the traditional IRA to Roth IRA (generally taxable)?
If you recharacterized your contribution your contribution will be deemed as never have been made to the traditional IRA but deemed to have been made to the Roth IRA instead. You will not have to pay any taxes on the earnings.
If you indeed recharacterized your contribution then you will have to enter this into TurboTax:
- Login to your TurboTax Account
- Click on "Search" on the top right and type “IRA contributions”
- Click on “Jump to IRA contributions"
- Select “traditional IRA”
- Answer “No” to “Is This a Repayment of a Retirement Distribution
- Enter the traditional IRA contribution amount
- Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount (no earnings or losses)
- 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.
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