Skip to main content
Level 2
June 1, 2019
Question

I did a 2017 nondeductible IRA contribution+Roth conversion & 2018 Roth recharacterizationton(only IRA filed). Do I need to amend 2017 returns for a 2018 1099-R received?

  • June 1, 2019
  • 8 replies
  • 21 views
No text available

    8 replies

    macuser_22
    Alumni - Champ
    Alumni - Champ
    June 1, 2019
    Explain what you mean by "2018 Roth recharacterization"?   
    Was it a 2017 contribution recharactorized in 2018?
    What code in in box 7 on the 1099-R?
    **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.**
    macuser_22
    Alumni - Champ
    Alumni - Champ
    June 1, 2019
    I am assuming that the 1099-R has a code "R" in box 7 - is that correct?

    Yes, you must amend 2017 to report it if you did not already do so.

    A 2018 1099-R with a code R in box 7 (Recharacterized IRA contribution made for 2017 and recharactorized in 2018) will tell
     you that you must amend 2017.

    A code R 1099-R does nothing whatsoever if entered into the 1099-R section of an amended 2017 return. It does not get sent to the IRS and nothing goes on the tax return at all. The only purpose of the 1099-R is to report the recharacterization to the IRS, but it still must be reported on your 2017 tax return.

    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.

    The proper way to report the recharacterization and earnings which is to enter the 2017 IRA contribution in the IRA contribution interview section and then say yes to "Did you switch from a Roth to a Traditional IRA - recharacterize".

    The amount The amount of the original Roth contribution must be entered - not any earnings or losses.

    Then TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss)  were recharactorized.

    There is no tax or penalty on the before-tax earnings since the earning were simply switched into the recharactorized account.

    That is the only way to prepare and attach the proper line 15a explanation statement for a code R 1099-R.

    Enter IRA contributions here:
    Federal Taxes,
    Deductions & Credits,
    I’ll choose what I work on (if that screen comes up),
    Retirement & Investments,
    Traditional & Roth IRA contribution.

    OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

    Since the after-tax Roth contribution is now a Traditional IRA contribution it can be either a before-tax deduction if your MAGI allows a deduction which might result in an additional 2017 refund, or it will be an after-tax contribution reported on a 8606 form (line 1 & 14) as a "basis" in the Traditional IRA that will reduce the tax of future distributions.
    **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.**
    VK24Author
    Level 2
    June 1, 2019
    I did the IRA contribution and Roth conversion in 2017 and recharacterized the Roth conversion back to an IRA in March 2018 prior to filing 2017 returns. The 2017 returns included just the original IRA contribution.

    For my 2018 returns, when I entered the 1099R received for recharacterization, Turbotax asked me to amend 2017 returns given the small gain in the recharacterized amount.
    VK24Author
    Level 2
    June 6, 2019
    Thanks for the detailed response @macuser_22.  Yes the 1099-R does have an "R" in box 7, box 2a is 0, and box 1 does have the gains included in it. Agree that there are no tax impacts for 2017 or 2018 (as my original Traditional IRA contribution was non-deductible)

    After reading your response a few times, I think I get it. I did report the Traditional IRA contribution in my 2017 returns and the 1099-R for the Roth IRA recharacterization (distribution) in my 2018 returns. What I missed in 2017 is reporting the Roth conversion which is where I guess the steps above come in. Many Thanks...
    macuser_22
    Alumni - Champ
    Alumni - Champ
    June 6, 2019
    If you already reported the 2017 contribution  as non-deductible and there was a 2017 8606 form with the non-deductible contribution on line 1, 3 &14 then there is noting else to do.
    **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.**
    VK24Author
    Level 2
    June 6, 2019
    Yes, there was a 8606 with these lines. Also, the 2018 Traditional IRA basis in 8606 is correct. Thanks
    DanielV01
    Level 15
    June 6, 2019

    No.  2018 forms are filed with a 2018 Tax Return, not 2017.  The original 2017 contribution (although made in 2018) does count on the 2017 return, but it sounds like you included that information already.  The 2018 conversion, although made immediately after the contribution (or recharacterization), is reported for the 2018 tax return.  To make sure that additional tax does not calculate on the conversion, please see this FAQ:  https://ttlc.intuit.com/replies/6768029

    **Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"
    VK24Author
    Level 2
    June 6, 2019
    Thanks.