i accidentally contributed to Roth IRA last year, but i want to change to traditional to reduce my income? How

If you contributed to a Roth IRA in 2020 but would like to be able to benefit from the traditional IRA deduction then you can recharacterize your 2020 contribution. You will have to contact your bank before April 15 and tell them you want to recharacterize your Roth contribution as a traditional IRA contribution.

Please be aware that the deduction of the traditional IRA may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. Please see IRA deduction limits for details.

Please follow these steps to enter the recharacterization in TurboTax:

1. Login to your TurboTax Account 
2. Click on the Search box on the top 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 
7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount (no earnings or losses)
8. 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.

Thanks! I read something here about I need to calculate the gains/loss. I've actually lost the money bc the stock market but how do I calculate that? I read I need to tell my bank how much including the gains and loss to recharacterize. 

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@choosybean wrote:

Thanks! I read something here about I need to calculate the gains/loss. I've actually lost the money bc the stock market but how do I calculate that? I read I need to tell my bank how much including the gains and loss to recharacterize. 

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When you tell the bank to recharactorize it, then the bank must calculate the earnings (or loss) and also transfer that to the other IRA.   When you enter it in the IRA Contribution interview, the amount recharactorized must be the exact same amount as the original contribution, not counting any gain or loss.    The gain (or loss) you account for in your explanation statement that TurboTax will ask for.

Your bank should be able to calculate any losses or earnings attributed to the recharacterization Please check with your bank.

You will only need the loss or earning for the statement part the other entries will be your original contribution amount.

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I see so if I contributed 7k to Roth 3 month ago, I recharacterize 7k to traditional. I do not need to do anything about the gains/loss that 7K had? 

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@choosybean wrote:

I see so if I contributed 7k to Roth 3 month ago, I recharacterize 7k to traditional. I do not need to do anything about the gains/loss that 7K had? 

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Other than the explanation  statement - no.

The bank should have transferred less then the 7K to the other IRA if a loss, and more then the 7K if a gain, to account for the gain/loss, but *you* recharactorized the 7K.

I see, I use Fidelity and they don't calculate for me, my option is to state how much I want to characterize and then tell them which equity and mutual fund or settled cash to take it out from. :_(