I contributed $6500 (over 50) to a Roth IRA in June 2017 then sold stock in Sept that took my income over the limit for Roth contributions. I recharacterized the amount to a traditional IRA (now worth about $6900) and waited a day and converted it back to a Roth, a so called back door Roth. I do not own any other Traditional IRAs and my balance in this Trad IRA is now zero. All of the money i contributed was after tax dollars but i cannot find out how to capture this in Turbo tax as as soon as i start entering numbers my refund number plummets which is clearly not right. What am I doing wrong? Thanks
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Enter the Roth contribution in the IRA contribution section. Answer the question that it was recharacotrized to a traditional IRA. Be sure to answer the question that you wan to all non-deductible. Answer the explanation statement.
That should produce a 8606 form with the now non-deductible Traditional IRA basis on lines 1-5 if you have no other Traditional IRA basis.
Then enter the 1099-R for the Traditional IRA distribution and answer the follow up questions about the Roth conversion and additional questions after the 1099-R summary screen that would ask about non-deductible basis. And the total 2017 year end value of all Traditional IRA account. The 2017 IRA contribution that was entered should be used to calculate the taxable amount on lines 6-15 on the 8606 form.
If the contribution offsets the conversion and there are no Traditional IRA accounts open at the end of 2017 then the tax should be zero.
I did the same thing (Roth contribution, recharacterize to Traditional, then convert back to Roth).
- $6000 -> Roth, which grows to $6075
- Recharacterize the $6000 contribution to Traditional, so now $6075 is in my Traditional
- Traditional grows to $6125 when I finally convert it back to Roth
My form 8606 is correct. On my 1040, the line item "4a IRA Distributions" is $12,200 and "4b taxable amount" $125.
The taxable amount is correct, but is line item 4a correct? It's $6075 + $6125. I know the $6125 from Traditional to Roth is a distribution, but is the recharacterization a distribution also? It looks like it might be from #6 in exception 2 here https://www.irs.gov/instructions/i1040gi#idm[phone number removed]400. Can you confirm this?
Yes. 4a is correct. You had two distributions and both must be reported to the IRS (even if it is the same money). 4a is the gross amount listed in box 1 of each 1099-R.
(I am assuming the 1099-R for the recharacterization has a code N in box 7.)
Thanks!
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