Reporting a Recharacterization for Backdoor Roth IRA

[ales01]

Hi, I was wondering if someone could walk me through entering my recharacterization and Backdoor Roth IRA into turbo tax based on my situation:

- In 2024 I contributed I contributed $7,000 directly into my Roth IRA and purchased some stock

- In January of 2025 I realized I was above the limit Roth IRA limit the prior year and proceeded to perform a recharacterization in the form of the stock shares. By that time my shares had increased in value to $10,277. During the 1-2 days it was in my traditional IRA, the value increased to $10,626, and that's what was ultimately transferred back to my Roth IRA

- In April 2025 I submitted my taxes for the 2024 year with form 8606 (line 1: 7000, line 3: 7000, line 14: 7000)

- In December 2025 I contributed $7,000 into my traditional IRA and rolled it over into my Roth IRA performing a Backdoor Roth contribution for 2025. Unfortunately, 66 cents were left in my traditional IRA on January 1, 2026, and I have left it there since

- Below are my 1099-Rs from 2025 and my 5498 from the 2024 tax year. I have not received the 5498 for 2025 (and suspect I won't before the tax deadline in April 2026)

Roth IRA form 1099-R

1. Gross distribution: 10277

2a. taxable amount: 0

7. R

Traditional IRA form 1099-R

1. Gross distribution: 17626

2a. Taxable amount 17626

2b. Taxable amount not determined and total distribution are both marked with X

7. Distribution code 2, IRA/SEP/SIMPLE box marked with X

Roth IRA form 5498 from 2024

5. fair market value of account

7. IRA type Roth IRA

10. Roth IRA contributions 7000

Questions:

1. Are you able to provide me a step by step guide based on my numbers? I've walked through it myself but I get confused based on the wording of the questions and I'm unsure if I've done it correctly. I have Turbo Tax Deluxe for Windows.

2. When I went through it myself I was prompted that I might need to amend my 2024 taxes I submitted last year. It didn't provide any information on what I would need to amend. Based on the information I've provided did I make a mistake with my reporting last year on form 8606?

3. My understanding is I'll have to pay taxes on the gains I recharacterized (e.g. 10,277 - 7,000 = $3,277). Where does this get reported?

4. During my recharacterization my $10,277 increased to $10,626 while in my traditional IRA. It was in the form of stock. Is this an issue, and how do I report it?

5. How do I report the 66 cents in my traditional IRA? My plan is to perform another backdoor Roth IRA this year and just make sure my traditional IRA sits at $0 before December 31, 2026

Appreciate all the help!

[baldietax]

1. Are you able to provide me a step by step guide based on my numbers? I've walked through it myself but I get confused based on the wording of the questions and I'm unsure if I've done it correctly. I have Turbo Tax Deluxe for Windows.

Just follow the standard steps for backdoor Roth in 2025, in 2 parts - enter the 1099-R for the full Roth conversion and following questions to identify it as a Roth conversion, you had 0.66 cents left as your MV as of 12/31/25 (Turbo may prompt you need Form 5498 but this is misleading, IRS instructions are to use year-end statements available in January); and enter the 2025 non-deductible contribution.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/enter-backdoor-roth-...

2. When I went through it myself I was prompted that I might need to amend my 2024 taxes I submitted last year. It didn't provide any information on what I would need to amend. Based on the information I've provided did I make a mistake with my reporting last year on form 8606?

Which question prompted this... I am not seeing why you would need to amend your 2024 taxes if you included the Roth re-characterization in 2024 and ended with 2024 Form 8606 Line 14 = $7000.  It may be referring to the basis if you had to amend that question for some reason (e.g. 2024 data wasn't carried over).

3. My understanding is I'll have to pay taxes on the gains I recharacterized (e.g. 10,277 - 7,000 = $3,277). Where does this get reported?

This will fall out from the tax calculation on Form 8606 and you should see this on Form 1040 Line 4b.  You did a Roth conversion for $17,626 and had a $14,000 basis in the IRA so 14k will be tax-free and the rest will be taxable.  The gains you re-characterized are included there.

4. During my recharacterization my $10,277 increased to $10,626 while in my traditional IRA. It was in the form of stock. Is this an issue, and how do I report it?

Same as #3 - this is included in the taxable difference between the MV you converted and your 14k basis in the IRA

5. How do I report the 66 cents in my traditional IRA? My plan is to perform another backdoor Roth IRA this year and just make sure my traditional IRA sits at $0 before December 31, 2026

Just respond to the question about your MV as of 12/31/25.  Your 0.66 will be rounded up to $1 on Form 8606 Line 6 and may get left behind as $1 basis in your IRA carried over to 2026.  When you clean it up $0 this year then that basis will get relieved.  See also this article

https://www.whitecoatinvestor.com/pennies-and-the-backdoor-roth-ira/

Not a CPA but above is my understanding based on what you laid out - hope this helps.

[baldietax]

P.S. my assumption is this 1099-R was for tax year 2024 and it was in your 2024 taxes to take care of the recharacterization then

Roth IRA form 1099-R

1. Gross distribution: 10277

2a. taxable amount: 0

7. R