Entering recharacterization of Roth contribution to non-deductible Trad for tax year 2020

[Novice_user]

Hello and thank you in advance.  I'm not a tax pro, so I want to make sure I'm entering this correctly.  The 1st time TurboTax told me I had overcontributed.  Please scroll on down to see the TT entries.

Events: 

1.  Contributed $3k to my existing Roth in Nov. 2020.  No other 2020 contribs to either Roth or Trad.

2.  Made too much income in 2020, so am recharacterizing the contribs (plus earnings) into a newly opened non-deductible Traditional.  No previous Traditional IRAs. 

3.  After the $3k + earnings are placed into the non-deductible Trad, will contribute another $3k to the Trad to top off for 2020, plus another $6k for 2021. 

4.  Finally, will backdoor convert the whole cash balance to Roth, and presumably owe taxes on the earnings when I file next year.

I believe that I should ultimately receive the following:

For 2020: 

1) A 5498 for the Roth contribution showing $3k

2) A 5498 for the Trad contributions showing $6k (as it should include the recharacterized $3k?)

For 2021:

1) A 5498 for the Trad, showing $6k in 2021 contributions

2) A 1099-R for the Roth, showing the recharacterization distrib of $3k + earnings

3) A 1099-R for the Trad, showing the whole conversion to Roth

4) A 5498 for the Roth, showing receipt of the conversion

Ok.  On to TurboTax.

1.  On "Traditional and Roth IRAs" screen:  check the boxes for both Traditional and Roth contributions.

2. "Repayment of Retirement Distribs?"  No.

3.  "Tell us how much you contributed to the Traditional IRA"  Should this be $3,000, or $6,000?  The system says don't enter Roth Contribs, even if Recharacterized, but I don't think that gels with the tax reporting?  Entering $3k seems to work. 

4. "Tell us how much you contributed between January 1 and April 15" Again, entering $3,000 seems to make it work. 

5. "Did you change your mind and rechar from Trad to Roth?"  No. 

6. "Excess contribs prior to 2020?"  No. 

7.  "Any Nondeductible Trad Contribs...at or prior to 2019?"  No. 

8.  "Enter your Roth Contribs"  $3000

9.  "Tell us how much you transferred"  $3000 recharacterized.  Should I include earnings with this?

10.  Filled out the explanation statement.

11.  "Did you open Roth before 2020"?  yes. 

12. "Let us track your Roth basis" no. 

13.  "Do you have any excess Roth Contributions?"  Answered "no," because they should be recharacterized.

14.  "Income too high for IRA deduction"  Ok.

15.  "Contributions withdrawn before due date"  Answered "no," again because they were recharacterized. 

THANK YOU. 

Related to:  https://ttlc.intuit.com/community/retirement/discussion/how-do-i-enter-recharacterization-of-excess-...

[incredibles1]

In the same position. Would love to hear some tax advise for this scenario.

[DanaB27]

Yes, you will only enter $3,000 as contribution to the traditional IRA (step 3)

No, you will not include the earnings on the "Tell us how much you transferred" screen (step 9).

It seems as if you entered everything correctly.

@Novice_user

Here the the steps to review to enter the recharacterization 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 “No” to “Is This a Repayment of a Retirement Distribution
6. Enter the Roth contribution amount 
7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount (no earnings or losses)
8. 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.
9. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if 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 and you only get a screen saying $0 is deductible)

@incredibles1