Re: Roth recharacterization with incorrect 1099-R saying early distribution

fshams · Feb 3, 2022 8:36:36 PM

I contributed small amount to my traditional IRA in 2020, but later found out that I cant deduct it from my income due to my income level, but still can contribute to Roth IRA. So, in 2021 before filing my 2020 taxes, I used my online broker account to move the money and its gain to my Roth account . I didnot deduct this money from my income and didnot file 8606. Because IRS says if you recharacterize all the contributions in year, you dont need to file 8606.This year, I received my 1099-R from my broker with early distribution - code 2 in box 7- in 2021. I dont need to pay penalty, but have tp pay tax for distribution, which I havent deducted it in 2020 taxes.I called my broker to correct it and they said that for recharacterization they have a form which needs to be filled manually to show that this transfer was recharacterization, otherwise they wouldnt know and will report it as early distribution.How can I handle this situation?Thanks