Seem to be double taxed

Forum|Forum|3 years ago
April 8, 2023
2 replies
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Hi I am currently trying to file my tax report using turbotax premier.
I had to do recharacterize/conversion (roth to traditional and back to roth ira due to unexpected financial change).
I received 4 forms of 1099R(marked for 2022) (2 for me and 2 for my wife - we both did the same thing R to T and T to R ira). Although they are marked 2022, but for 2021.
since we knew our income(agi) will not be greater than 200k this year thus we contributed to our roth IRA account.

I did import forms from the fidelity (my retirement bank) then the 4 forms were automatically imported.
when I when through the turbo tax, it shows me that I need to pay the tax due to taxable income, which is the sum of the recharacterized IRAs (me and my wife - joint filing).

why is the total of the recharacterized/converted contributions

are taxable? Since I payed the tax for the roth ira (before recharacterization), it is double taxed.

fanfare

Level 15

it would be easier if you do not import those 1099-Rs and just report the net result, because the unwanted effect have to be unwound with the proper Q&A which can be troublesome.

@tobyicnoise

fanfare

Level 15

recharacterization: the original amount to the first IRA you report as contribution to the second IRA, earnings are ignored.
report this on your tax return for the year during which the contribution was made.

return of excess contribution:

before tax due date including extensions: positive earnings allocable to the excess are taxable on the Line 4b for the year of the contribution. negative earnings are ignored; therefore, do report the entire requested amount as returned .

positive earnings removed are penalized 10% if you are under age 59 1/2.

after tax due date including extensions: you distribute the excess amount being carried forward on 5329,

(or offset it with currently allowed contribution) .

Earnings stay in the Roth account.

if you are doing a backdoor Roth, the contribution into the Traditional IRA has to be designated non-deductible

@tobyicnoise