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 (Essentially I have both a recharacterization of a roth > traditional and then I also performed a backdoor roth of traditional > back to roth on the same 2022 contribution). 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 about 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!

[DanaB27]

On your 2022 tax return, you will enter the recharacterization starting with the Roth IRA contribution and will make it nondeductible (if not automatically nondeductible) and TurboTax will create the 2022 Form 8606 with a basis on line 14. This will be entered on your 2023 tax return (it should carry over automatically).

You will enter the recharacterization when you enter the contribution to the Roth IRA on your 2022 tax return:

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”
5. Answer ‘Yes” on the “Roth IRA Contribution” screen
6. Answer “No” to “Is This a Repayment of a Retirement Distribution
7. Enter the Roth contribution amount 
8. Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount (no earnings or losses) on the next screen.
9. 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.
10. 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)

Next year on your 2023 tax return you will 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 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[kyx]

Thanks, so seems like the actual backdoor portion won't be reported until i file for 2023. Given this was backdoor was done on my 2022 contribution and I plan to do a similar 2023 backdoor roth contribution in the 2023 calendar year. Will I report both backdoor in my 2023 filing or will my 2023 contribution be reported in my 2024 filing?

[DanaB27]

A contribution for 2022 will be entered on your 2022 tax return. A contribution for 2023 will be entered on your 2023 tax return. 

And the conversion will be reported in the year you made the conversion (moved the funds from a traditional IRA to Roth IRA). Therefore, when you made the conversion in 2023, then you will get a 2023 Form 1099-R and this will be reported on your 2023 tax return.

@kyx