Recharacterization explanation incorrect - do I need to amend?

[erica28]

I made a contribution to my Roth IRA in 2023 and later found out as I did my taxes this year in 2024 that I was over the income AGI, so then I recharacterized the Roth contribution to my traditional IRA. My question is, I mis-calculated the earnings and put the wrong number on the Explanation statement about the recharacterization. Do I need to amend my tax return to put the correct number for the earnings on the Explanation statement?

If it helps any, I had thought the earnings were only $1 and they turned out to be $920, so it was a big difference.

#recharacterization #explanation #earnings

Thank you!

[erica28]

I put this post in the wrong category. How do I put it in a different community (not Investors & landlords)?

[DanaB27 · Accepted solution]

No, you do not need to amend your return if you entered the wrong amount on the explanation statement.

A recharacterization is entered 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”
5. Answer ‘Yes” on the “Roth IRA Contribution” screen
6. Answer “No” to “Is This a Repayment of a Retirement Distribution
7. Enter the Roth contribution amount 
8. 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.
9. 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.
10. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" if you are thinking about doing a backdoor Roth. Otherwise select "No". (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)

You will get a 2024 Form 1099-R  for the recharacterization with code R-Recharacterized IRA contribution made for 2023 and this belongs on the 2023 return. But a Form 1099-R with code R will do nothing to your return. You can only report it as mentioned above. Therefore, you can ignore the Form 1099-R with code R when you get it in 2025.

[jimelindal]

So I just want to be clear that I have the same issue.   This is for our Son.   He claimed on his tax's that he took a 5000 Roth IRA Contribution in 2023, but now he is getting married, and buying a house.   He has deceided not to put that money in his Roth this year after all.   Does he need to amend his taxes?  If I am reading this correctly the answer is no.  But he should submit a Recharacterization explanation;  to indicate that he did not contribute any IRA contributions for 2023.    By submitting this does that correct his cost basis on the Roth IRA?   Thanks so much for any help you can provide!  

Linda Schmit

[fanfare]

In this situation there is nothing to do unless your son took a Retirement Savings Contributions Credit .

@jimelindal