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Retirement tax questions
You will enter the recharacterization when you enter the contribution to the Roth IRA:
- Open your return
- Click “Deductions &Credits” on the top
- Click "I'll choose what to work on"
- Scroll down to “Traditional and Roth IRA Contributions” and click “Start”
- Select “Roth IRA”
- Answer ‘Yes” on the “Roth IRA Contribution” screen
- Answer “No” to “Is This a Repayment of a Retirement Distribution
- Enter the Roth contribution amount
- Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount (no earnings or losses) on the next screen.
- 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.
- On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" since 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 warning and then a screen saying $0 is deductible).
Next year on your 2023 tax return you will enter the 2023 Form 1099-R for the conversion:
- Click "Federal Taxes" on the top and select "Wages & Income"
- Click "I'll choose what to work on"
- Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)"
- Answer "Yes" to the question "Did You Have Any of These Types of Income?"
- Click "I'll Type it Myself"
- Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
- Click "Continue" and enter the information from your 1099-R
- Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
- Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
- On the "Your 1099-R Entries" screen click "continue"
- Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
- Answer the questions about the basis from line 14 of your 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs
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April 14, 2023
1:47 PM