I have a very complicated situation here. In 2021 I made higher than the MAGI for roth IRA without knowing about this rule. So I recharacterized the over contribution to traditional IRA in March of 2022 for $3860 (for the year 2021) and then converted back to Roth IRA a few days later in the amount of $3840 as the market was going down. Unfortunately I already put in my Roth IRA contribution for 2022 before I realized I am over the MAGI again. So I also had to recharacterize my Roth IRA contribution in 2022 as well. On July, I requested another recharacterization in the amount of $6000 just to clean things up. Market was doing horrible so the actual amount they pulled out was $4660. Then I did a Roth IRA conversion about 2 weeks later in the amount of $4980 (the market was doing better at that point).
This year, I received 2 x 1099R. One for my traditional IRA and one for my Roth IRA. I entered in all the 1099R in the income section and it came up saying that i had 17k income. But this is all numbers switching back and forth!
Any help to walk me through how to properly enter all the information so I file my taxes correctly would be greatly appreciated.
Thank you very very much!
recharacterization: you report the original amount as contribution to the second IRA, earnings are ignored.
return of excess contribution:
before tax due date including extensions: positive earnings are taxable on the Line 4b for the year of the contribution. negative earnings are ignored; therefore, do report the entire requested amount as returned .
positive earnings removed are penalized 10% if you are under age 59 1/2.
after tax due date including extensions: you distribute the excess amount being carried forward on 5329,
(or offset it with currently allowed contribution) .
earnings stay in the Roth account.
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Using these guidelines, just tell TurboTax what you did, in the order you did it.
Should I enter all the the 1099R (one for the traditional to roth IRA conversion and the other 2 1099R for the 2021 and 2022 roth ira recharacterization?
Would someone be able to give me a step by step guide? Thanks.
the first recharacterization request for 2021 is a contribution for 2021.
if you make it non deductible you put that amount on 2021 Form 8606,
the second request for 2022, if non-deductible, has to go on 2022 Form 8606.
if you are not going the non-deductible route, it is an IRA deduction for 2021 and an IRA deduction for 2022, respectively.