2019 Roth contribution Recharacterized to Traditional IRA in 2020

[iraquestions]

I contributed $6,000 to a Roth IRA in 2019. In 2020, I realized that I was not eligible to contribute to a Roth, and I recharacterized my contributions to a Traditional IRA in March 2020.

I understand I can wait to handle this until next year when I get my 1099R and amend my 2019 return, but I would like to do it now and avoid amending my return if possible.

I've seen examples of a "Mock 1099R" from @macuser_22 posted which have been very helpful. But I cannot find an example that is exactly what I have done, and have some questions on the Mock 1099 R if someone can help.

Facts:

-  $6,000 contributed to Roth in 2019

-  In March 2020, I recharacterized the contributions to my Traditional IRA. $6457.20 was transferred ($6,000 original contribution plus $457.20 in gains calculated by TD Ameritrade)

-  I do not have a 1099R or a 5498 form yet, since these are 2020 transactions

If the mock 1099R is a viable path... can someone help me confirm the following?

Box 1 = $6,457.20

Box 2a = $0 or $457.20 ?

Box 2b = leave unchecked ?

Box 3 = $457.20 ?

Box 4 - 6 = leave blank ?

Box 7 = this is where I am most confused and looking for guidance. J & R make sense to me, but R has the wrong years (2018 contribution recharacterized in 2019). I've seen other forum references to P as well.

Box 8+ = leave blank ?

I appreciate the help! I apoligze if this post duplicates another, but I did a good scrub of the open questions and couldn't find one that was the same (if there is one I missed that you are aware of, please let me know!). let me know if you need any additional information.

[macuser_22]

You are confusing a "recharacterization" and a "return of contribution" which are totally different.

Which did you do?

A 1099-R with a code JP is a "return of contribution" when the contribution (plus earnings) were returned to *you* and you have the money.

A recharacterization is if the IRA custodian simply moved the Roth contribution (plus earnings) from the Roth IRA to a Traditional IRA as if the Roth contribution was never made in the first place.

They are reported in total different ways - which did you do?

[iraquestions]

Thanks for jumping in and helping out!

I Recharacterized - the Roth contribution was moved from the Roth IRA to a Traditional IRA.

I do not yet have the 1099-R, so I am trying to speculate the codes there.

Thanks!

[macuser_22]

A 2020 1099-R with a code R in box 7 (Recharacterized IRA contribution made for 2019 and recharactorized in 2020) will tell you that you must amend 2019.

A code R 1099-R does nothing whatsoever if entered into the 1099-R section of an amended 2019 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 2019 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 2019 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 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 2019 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.

[iraquestions]

To clarify, are you saying I should NOT do the mock 1099-R, and only do the IRA contribution interview process described below? That means I will be required to amend my 2019 return next year?

If so, I will do the interview section again. I've tried previously and gotten errors. I'll follow the steps that you have outlined below, and if I run into the error again I'll submit another post.

I may have added to the confusion by mentioning a 1099-R with code R - are you saying that you expect I will get a form of this type next year?

Thanks again! I appreciate your support and patience.