How do I enter recharacterization for 2018 into TurboTax?

[sntrypilot]

Here is my situation:

1. In  the 2017 Tax Year I:
   • Converted $50,520.10 from my Rollover IRA to my Roth IRA
   • Paid taxes on this full amount.
2. In the 2018 Tax Year, I :
   • Contributed $4,938 into my Roth IRA
   • Recharacterized $21,118.79 of the converted $50,520.10 from the 2017 Tax Year back into the original Rollover IRA. This included earnings on the converted amount.
   • Paid taxes (for the 2017 Tax Year) in 2018 on the $29,401.31 that remained in my Roth IRA (i.e. that portion of the $50,520.10 that did not get recharacterized back to my Rollover IRA).
   • Converted $71,967.84 for the 2018 Tax Year from my Rollover IRA to my Roth IRA
   • Received Form 5498 and Form 1099-R for both my Rollover IRA and Roth IRA accounts 

I'm having trouble figuring out how to enter all this into the TurboTax program for Tax Year 2018. Can you please give me some instructions and guidance?  Thank you.

[macuser_22 · Accepted solution]

For one thing - if you make a conversion *in* 2017 and recharactorized it *in* 2018 AND before the due date of your 2017 tax return (Apr 15, 2018) OR extended due date (Oct 15, 2018) IF you had filed a timely extension or filed your 2017 tax return on time before April 15,  then you should have received a 2018 1099-R with a code "R" in box 7.

A 2018 code R 1099-R is a 2017 conversion recharactorized in 2018 and gets reported on an amended *2017* tax return, not a 2018 tax return.

A code R 1099-R does nothing whatsoever if entered into the 1099-R section of an amended 2017 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 2017 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 2017 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 line 15a explanation statement for a code R 1099-R.

[sntrypilot]

Wow! Thank you so much. Your reply totally answers my question, and I never would have figured that out on my own. Exactly as you mentioned in your reply, I do have an "R" code in Box 7 of my Roth IRA 2018 Form 1099-R and I did file my 2017 Tax Return before the 2017 tax-filing deadline and had already filed/claimed the recharacterization on my 2017 tax return (including a Line 15a statement like you described in your reply. So it seems I had already taken care of this issue last year and "spinning myself in circles" for nothing. Simply amazing. Thanks again for getting me back on track!

[Chaulk]

 I received a 2019 Form 1099 R and I recharacterized a roth into a traditional but the interview on the cd version only allows me to report traditional into a roth. I am trying to ammend this return.

[macuser_22]

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@Chaulk wrote:

 I received a 2019 Form 1099 R and I recharacterized a roth into a traditional but the interview on the cd version only allows me to report traditional into a roth. I am trying to ammend this return.

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You enter the Roth contribution in the IRA contribution interview for a *Roth* IRA and follow the steps in my answer above.

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.