I did both a IRA recharacterization (Roth -> Traditional) and a Backdoor Roth Conversion in the same year. How do I report this?

[henryzhu1]

In January 2023, I made a $6500 contribution to my Roth IRA account (for the 2023 year). I didn't realize until a few days later that my MAGI was too high for that. So I had Fidelity recharacterize that contribution as a contribution to my Roth account. By this point there was some growth so the amount that was recharacterized was 6603. I then immediately did a Backdoor Roth conversion, which turned that 6603 back into Roth.

My question now is how do I enter this in turbotax?  Should I select both Traditional IRA and Roth IRA? I'm following these 2 guides:
https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-income/recharacterize-roth-ir...
https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

However doing both of these makes turbotax think I've over contributed by 6603. 

[fanfare]

when you recharacterize, earnings go along for the ride, but are ignored.

to execute your plan, you have to tell turbotax that the amount going into your traditional IRA ($6500) is a non-deductible contribution.

Then you can enter the 1099-R for conversion.

[DanaB27]

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

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 of $6,500
8. Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount of $6,500 (no earnings or losses) on the next screen.
9. TurboTax will ask for an explanation statement where it should be stated that the original $6,500 plus $103 earnings were recharacterized.
10. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" since you are  doing a backdoor Roth. (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)

To 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

@henryzhu1 

[henryzhu1]

Thanks Dana. A few questions. For 2023 I received multiple 1099-Rs related to the traditional and roth accounts used for this.

I have one with a Gross Distribution $6603, Taxable Amount $0, and Distribution code N, and nothing else for my Roth IRA account.

I have another with Gross Distribution $6603, Taxable Amount $6603, Taxable Amount Not Determined checked off, Total Distribution checked off, Distribution Code 2, and IRA/SEP/SIMPLE checked off for my Traditional IRA account.

Which 1099-R should I apply your steps on?

[DanaB27]

You will enter both Form 1099-Rs but the conversion questions will apply to the Form 1099-R with code 2.

To enter your Form 1099-Rs:

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 with code N 
4. Continue through the questions.
5. On the "Review your 1099-R info" screen click "Add another 1099-R"
6. Enter Form 1099-R with code 2
7. 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”
8. On the "Review your 1099-R info" screen click "Continue" (after you added all 1099-R)
9. Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
10. Answer the questions about the basis from line 14 of your 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs