Filing two 1099-Rs for recharacterization and backdoor roth IRA

[Anonymous]

Hello TurboTax Community!

I was hoping to seek some guidance on how to best go about filing my IRA tax info for 2022. I received two 1099-R forms (code 2 and code N) for 2022 with a gross distribution of $5686.02 for my traditional and $2155.51 for my roth IRA account. Here's a quick rundown on my IRA activity in 2022. I realized my income for 2022 was going to be too high so I created a backdoor IRA for the first time. I recharacterized the initial $2500 and then did the backdoor roth conversion of the $3500 to reach the max of $6000.

- Contributed $2500 to roth IRA 
- Recharacterized original $2500 to the traditional IRA at $2155.51
- Conversion of $2184.98 from traditional to roth IRA 
- Contributed $3500 to traditional IRA 
- Conversion of $3501.04 from traditional to roth IRA 

As I was going through filing my information TurboTax I noticed my IRA information was being added as my income for the year. My 1099-R for my traditional IRA has my taxable income as the $5686.02, should this value in box 2a taxable amount be $0 and not the gross distributions?

Is there anything else I need to fill out in Turbo Tax to make sure this is filled out correctly? How should I correctly input this information.

Thank you all for the help!

[DanaB27 · Accepted solution]

 No, you will enter Form 1099-R as shown on the form. Please be aware that the whole distribution will show as income in TurboTax on the summary screen which shows gross income, not taxable income. To verify that the entry is correct please look at Form 1040 line 4b (taxable amount).

To enter the traditional IRA contribution and recharacterization.

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 “traditional IRA” and "Roth IRA"
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
10. Answer ‘Yes” on the “Roth IRA Contribution” screen
11. Answer “No” to “Is This a Repayment of a Retirement Distribution
12. Enter the Roth contribution amount 
13. Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount of $2,500 (no earnings or losses) on the next screen.
14. 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.
15. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (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)

To enter the Form 1099-R conversion: 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "Continue"
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[Anonymous]

Hey Dana! Thank you for this response!

For entering in my traditional IRA contribution and recharacterization on step 7, instead of “Did You Change Your Mind?”  screen I had the "Tell Us How Much You Transferred" page come up. They asked how much of the $3500 I switched or recharacterized from a traditional IRA contribution to a roth IRA contribution and I put 0.

I believe this was my original error here, this value should be 0 since what I did here was a conversion. After following those steps, my federal taxes due dropped as my income was being reported correctly.

Thank you again for the help here