In 2017 I converted $10,000 from my IRA to a Roth IRA, as shown on 1099-R. Later in the year I recharacterized $9000 back to the IRA, as shown on second 1099-R. The Roth had increased in value and before the transfer was worth $11,000. After the transfer the balance was $2000, as shown on Form 5498.
When filling out the 1099-R forms on TT do I just fill in the amounts as shown on the forms? Do the 1099-R forms take into account that this was a partial recharacterization and the Roth had increased in value?
TT does ask when filling out the conversion 1099-R how much of the original amount was not recharacterized back into the IRA. How is this calculated? Is it $10,000-$9000=$1000 or is it the closing balance of $2000 or a more complex calculation? This of course is the key number as it is the amount one pays taxes on. Does TT have a worksheet for partial recharacterizations?
I am using round numbers for simplicity.
What year is on the 1099-R? What code is in box 7? Is anything in box 2a?
The recharacterization 1099-R is 2017, box 7 is "N," 2a is $0.00.
I should have also asked what was in box 1. The IRA trusted was supposed to calculate the amount of interest that the amount that was recharactorized and also move that to the Traditional IRA and include that in box 1. That would simply move form the Roth to the Traditional IRA and would not be otherwise reportable or taxable.
Are you just trying to file 2017 tax now? The taxable part of the Roth conversion should have been paid in 2017.
Since the amount moved back to the traditional IRA was $11,000, box 1 of the code N 2017 Form 1099-R should have shown $11,000. However, the amount recharacterized was $9,000 and, when you indicate in 2017 TurboTax that you recharacterized $9,000 back to a traditional IRA, the taxable amount of your conversion that was included on Form 1040 line 15b or Form 1040A line 11b should have been $1,000.
The details of the code N Form 1099-R entered into TurboTax are largely irrelevant because TurboTax ignores code N Forms 1099-R when preparing your tax return. All of the information is entered through the entry of the Form 1099-R that reported the $10,000 distribution that was originally converted to Roth.