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Returning Member
posted Apr 5, 2021 12:57:59 PM

How to correctly report recharacterization from Roth to traditional IRA (due to excess contributions). Amendment

My situation:

2020: Due to income limits, I overcontributed the entire $6K back in early 2020. Since then, it has grown to ~$7.3K. I have already recharacterized the entire amount with my brokerage. I have also already filed the taxes, so I need to amend them.

 

I am at the page: "Enter your Roth IRA contributions" Technically, my contributions were $6K, but if I put $6K in, it says I need to pay a penalty on the $1.3K earnings since it is technically "excess". If I put the entire contribution + earnings $7.3K, I don't run into the error anymore, but is that correct? It clearly says earnings. Otherwise, I'm not sure where else to put this info? 

 

Also, if I am considering doing a backdoor roth, what steps do I need to do after to do this in TurboTax? 

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3 Replies
Expert Alumni
Apr 5, 2021 2:04:51 PM

 

Click this link for detailed instructions on How to Enter Recharacterized Roth IRA Plus Earnings.

 

This link has info on How to Enter a BackDoor Roth Conversion.

 

 

Returning Member
Apr 5, 2021 2:10:39 PM

Yeah, I've gone through those posts, but it seems to be different in 2020 version. The steps seem to be different, and that specific individual has combined roth/traditional.

 

I know it is a long shot, but hoping someone has a step by step on how to amend in turbotax for recharacterization with earnings. 

Expert Alumni
Apr 6, 2021 7:05:17 AM

You will enter the recharacterization when you enter the contribution to the Roth IRA

  1. Open your return
  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  $6,000
  7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount (no earnings or losses) $6,000
  8. TurboTax will ask for an explanation statement where it should be stated that the original $6,000 plus $1,300 earnings 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)

 

If you decide to convert the amount in 2021 then you will get a 2021 1099-R in 2022 and enter these steps on your 2021 tax return:

 

  1. Open your return
  2. Click on "Search" on the top right and type “1099-R”
  3. Click on “Jump to 1099-R”
  4. Click "Continue" and enter the information from your 1099-R
  5. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
  6. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
  7. On the "Your 1099-R Entries" screen click "continue"
  8. Answer "yes" to "Any nondeductible Contribution to your IRA?"
  9. Answer the questions about the basis and value