I had to re-characterize my Roth contribution to IRA. I was told that if I did that prior to filing date, I did not owe a penalty. However, a penalty shows.Do I owe tax?

[wbear2000]

I did this prior to filing deadline and the amount transferred to the traditional IRA was less because the stocks had lost money since the contribution was made.  My form 5329 still shows that I owe a substantial tax penalty and the institution said that there was no penalty if I did this prior to filing date.  How do I fix this?

[dmertz]

TurboTax asks how much you switched from a Roth IRA to a traditional IRA, make sure that you enter the amount recharacterized (apparently entire amount you contributed to the Roth IRA), not the adjusted amount that was transferred to the traditional IRA.  If you originally contributed $5,500 to the Roth IRA and recharacterized the entire contribution, the amount recharacterized was $5,500.