In 2019 I recharacterized 2018 Roth IRA contributions to a traditional IRA. Also in 2019 made contributions to a Roth IRA total is less than the 6000 limit. Is this ok?

[mc_1127]

Does this mean that I have contributions to both a traditional and a Roth IRA for 2019?  Is this ok or do I need to recharacterize all the Roth contributions during 2019 to a traditional IRA?

[macuser_22]

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@mc_1127 wrote:
Does this mean that I have contributions to both a traditional and a Roth IRA for 2019?  Is this ok or do I need to recharacterize all the Roth contributions during 2019 to a traditional IRA?

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If you recharactorized a 2018 Roth contribution to a Traditional IRA then  it becomes a *2018* Traditional IRA contribution and must be reported on an amended 2018 tax return.   It would either be a 2018 deductible Traditional IRA contribution (if qualified to deduct or choose to deduct) that would probably result in an additional 2018 refund. 

If it is not deducible then it would be a 2018 non-deductible Traditional IRA contribution that must be reported on a 2018 8606 form line 1, 3 and 14.

You should have a 2019 1099-R with a code R in box 7 reporting the 2018 recharacterization.

A 2019 1099-R with a code R in box 7 (Recharacterized IRA contribution made for 2018 and recharactorized in 2019) will tell you that you must amend 2018.

A code R 1099-R does nothing whatsoever if entered into the 1099-R section of an amended 2018 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 2018 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 2018 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 explanation statement for a code R 1099-R.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

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 2018 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.

[mc_1127]

r the help.

The contribution that is being recharacterized for 2018 is non deductible. Can I just send in the 2018 form 8606 separately or should I file an amended return and include the 8606?  There is no tax effect for the 2018 return?  

[macuser_22]

Technically you should amend so that the recharacterization explanation statement gets sent to the IRS, but personally, I would just send the 8606 with an explanations attached.   The IRS will receive the 1099-R from the financial institution so they have been informed of the recharacterization so I doubt that you will ever hear from them - (They probably would not look at the statement on an amended return anyway.)

You can get the 2018 8606 here:

form: https://www.irs.gov/pub/irs-prior/f8606--2018.pdf

instructions: https://www.irs.gov/pub/irs-prior/i8606--2018.pdf

Where to mail:  https://www.irs.gov/filing/where-to-file-addresses-for-taxpayers-and-tax-professionals-filing-form-1...

[mc_1127]

Thanks. 

This keeps getting complicated. I had recharcterizations in  2015 and 2017 also. I can file the 2017 form 8606, but the statute is gone on 2015 so I could not file an amended return for it.  Should I just file the 2015 8606 anyway. I took a traditional ira distribution in 2019 that is the recharacterized prior distributions.  None of the recharacterized amounts were deductible so  can I claim the 2015 recharacterized contributions in my basis for the distribution?

[macuser_22]

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@mc_1127 wrote:

Thanks. 

This keeps getting complicated. I had recharcterizations in  2015 and 2017 also. I can file the 2017 form 8606, but the statute is gone on 2015 so I could not file an amended return for it.  Should I just file the 2015 8606 anyway. I took a traditional ira distribution in 2019 that is the recharacterized prior distributions.  None of the recharacterized amounts were deductible so  can I claim the 2015 recharacterized contributions in my basis for the distribution?

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You cannot amend 2015-2017 but you must file 8606 form for those years.    If you applied the non-deductible basis for any year that the non-deductible basis is not supported with a 8606 form the IRS can disallow it.  That usually takes 1-2 years after the 1099-R using that basis is filed.

You must file a seperate 8606 for each year using the specific form for that year.

Prior year 8606 form can be downloaded here:

https://apps.irs.gov/app/picklist/list/priorFormPublication.html;jsessionid=ZIBAezmlBR40D89ZdXjcpNDs...

[mc_1127]

Can I still file the 2015 8606?

[macuser_22]

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@mc_1127 wrote:

Can I still file the 2015 8606?

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Yes.   You can file 8606 forms as far back a 1987.

Note: that the IRS can charge a $50 penalty for each years 8606 that was not timely filed.

[mc_1127]

Thanks.