How to input Recharacterization (Roth > Traditional) and Backdoor Roth IRA in TurboTax?

[kyx]

Hi, 

I'm not too sure how to input this in TurboTax, any support would be awesome!

For background earlier this year (2023) I contributed $6k (max) to a roth ira for the 2022 tax year but as I started filing I realized that my MAGI for 2022 excludes me from being able to contribute directly to a roth ira. Thus I recharacterized this contribution to a traditional IRA (the account grew a bit so the full amount was closer to ~$6300) and then performed a backdoor roth (traditional > roth) on my 2022 contribution

Where I'm confused is how to input this. There are 2 turbotax guides I referenced:
1. https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-income/recharacterize-roth-ir...
2. https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

One of them asks me to select roth ira and the other asks me to select traditional ira, so I'm confused whether it should be one or the other or both. If someone could let me know what the exact steps I should do in order to convey my situation that would be great, thank you!

[ThomasM125]

For the Roth IRA contribution in 2023 made for 2022, you need to follow the instructions in the first example, report a Roth IRA contribution and then indicate that you recharacterized it to a traditional, non-deductible IRA contribution.

You can wait to report the transfer of funds from the Roth IRA to your traditional IRA until you receive the 1099-R form in 2024, but you would need to amend your 2022 return if you did so. You can report it now in 2022 by entering a substitute form 1099-R in 2022 to report the distribution from the Roth IRA to the traditional IRA and to report the income earned. You can follow these instructions to do that:

1. Choose the Federal option on your left menu bar
2. Choose Wages & Income
3. Choose the Retirement Plans and Social Security menu option 
4. Choose IRA, 401(k), Pension Plan Withdrawals(1099-R)
5. Choose the enter 1099-R option
6. Choose Change how I enter my form
7. Choose Type it in myself
8. Choose Financial institution or other provider (1099-R)
9. Enter in as much information as you can regarding the pension income 
10. Work through that section until you see Do any of these situations apply to you?
11. Choose I need to file a substitute 1099-R
12. Complete the information requested

Enter the distribution in box 1 and earnings in box 2(a) and use code "8" in box 7.

To do the Roth IRA conversion, you will have to wait until 2023, as that had to be done by the end of 2022. You will make these choices when you enter the Form 1099-R reporting the funds transferred to the Roth IRA:

@kyx 

{Edited 4/7/23 at 7:25 AM PST}

[kyx]

Hi @ThomasM125 

So clear on the point around entering the recharacterization. I'm not clear on how to enter the subsequent backdoor roth (traditional > back to roth on my contribution for the 2022 tax year). How would I do this? 

[DanaB27]

Your conversion happened in 2023 and therefore, as Tax Expert ThomasM125 stated, will be reported on your 2023 tax return.

To enter the Form 1099-R conversion on your 2023 tax return: 

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 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs