How to handle 1099-R with Distribution Code "R"?

[Kenneth]

Last year after doing my taxes I realized that I over contributed to my roth IRA (For 2017). So I had re-characterized it to a traditional IRA in 2018. When I was filling my returns (this year) for 2018 and added the 1099-R. It said that I might need to amend my 2017 returns. I had filled out the 8606 Form last year on my 2017 returns but do I need to amend it with the 1099-R? 

[macuser_22 · Accepted solution]

No.  If you properly already reported it in 2017 with a 8606 then you can ignore the 1099-R.  A code R 1099-R does nothing - it just reports it to the IRS.

If you already did then then ignore the 1099-R.

A code R 1099-R does nothing whatsoever if entered into the 1099-R section of an amended 2017 return. It does not get sent to the IRS and nothing goes on the tax return at all. The only purpose of the 1099-R is to report the recharacterization to the IRS, but it still must be reported on your 2017 tax return.

The box 1 on the 1099-R will report the total recharacterized amount (contribution plus earnings) but it does not separately report the earnings and box 2a must be zero.

The proper way to report the recharacterization and earnings which is to enter the 2017 IRA contribution in the IRA contribution interview section and then say yes to "Did you switch from a Roth to a Traditional IRA - recharacterize".

The amount The amount of the original Roth contribution must be entered - not any earnings or losses.

Then TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharactorized.

There is no tax or penalty on the before-tax earnings since the earning were simply switched into the recharactorized account.

That is the only way to prepare and attach the proper line 15a explanation statement for a code R 1099-R.


Since the after-tax Roth contribution is now a Traditional IRA contribution it can be either a before-tax deduction if your MAGI allows a deduction which might result in an additional 2017 refund, or it will be an after-tax contribution reported on a 8606 form (line 1 & 14) as a "basis" in the Traditional IRA that will reduce the tax of future distributions.

[vikalp]

I have similar situation.

I filed my 2022 tax return with Turbotax and took Traditional IRA deduction. Those funds were recharacterized from my Roth IRA. I did answer the questions on Turbo tax about how I am funding it with Roth recharacteization but in file return PDF, I don't see any mention of that.

Now I have got the form 1099-R with R code in box 7. So do I need to amend my 2022 return or how do I report this form in 2023 return.

I had no taxable income.

[DianeW777]

It depends. The 2022 tax return was completed correctly, however the transaction of the Roth recharacterize did take place in 2023 which means there was also accrued interest earnings removed and must be reported on the 2023 tax return. 

If you are not required to file because you have no other taxable income you can keep it with your tax files should you have questions later. The following links will allow you to view the filing requirements.

• Do I need to file a state return?
• Do I need to file a federal tax return?

@vikalp