Help with recharacterization

[HOTFRIES]

HI all - Still trying to sort out this mess of recharacterizing Roth IRA to traditional for being over income limits as a couple.  

So, I invested $6000 into a roth and recharacterized it as a traditional. The amount that went into the traditional IRA was 5903.99 on December 31, 2021

My husband put $7000 into a Roth IRA, but moving of the funds into the Traditional IRA were not completed by Schwab until 1/10/2022. $8175.17 was put into the Traditional IRA.

I got a 1099R and my husband did not because the recharacterization was not completed until 2022. Schwab said we would get a 1099R for him in 2023 for 2022.

So I am trying to fill out the section in Turbo Tax for the IRA contributions... How do I fill out those numbers? 

My Roth IRA $6000   Traditional IRA $5903.99??

Husband Roth IRA $7000.... but how do I handle his $ 8175.17 since this happened in 2022, but before tax returns are due for 2021.

I am so confused on what to do. Can anyone help me please. Thanks!!!! 

[DanaB27 · Accepted solution]

You will 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” for both of you
5. Answer “No” to “Is This a Repayment of a Retirement Distribution
6. Enter your husbands Roth contribution amount of $7,000
7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount of $7,000 (no earnings or losses)
8. TurboTax will ask for an explanation statement where it should be stated that the original $7,000 plus $1,175.17 earnings were recharacterized.
9. Answer “No” to “Is This a Repayment of a Retirement Distribution
10. Enter your Roth contribution amount of $6,000
11. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount of $6,000 (no earnings or losses)
12. TurboTax will ask for an explanation statement where it should be stated that the original $6,000 minus $96.01  loss were recharacterized.
13. 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 automatically and you only get a screen saying $0 is deductible)

To enter your 1099-R you got for your recharacterization please follow the steps below. It will be only for information and not be taxable. You have to report the recharacterization as mentioned above.

The 2022 1099-R you will get in 2023 will be for the recharacterization with code R-Recharacterized IRA contribution made for 2021 and this belongs on the 2021 return. But a 1099-R with code R will do nothing to your return. You can only report it as mentioned above. Therefore, you can ignore the 1099-R with code R when you get it in 2023. 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.

[HOTFRIES]

Thanks! That lines up with what I figured out to do with much research!