Recharacterization of Roth IRA to Traditional IRA then backdoor Roth IRA...1099-Rs indicate I'm getting taxed the full amount?

[acandero]

Timeline:

1. In 2022, I mistakenly contributed $2236 to my Roth IRA not realizing my MAGI exceeded the annual limit.
2. In 2023, I recharacterized the full $2236 amount as a Traditional IRA ($2223 actually got transferred), and then converted $2246 back to a Roth IRA. At the time of conversion, I had no pretax TIRA balance.
   1. Keeping in mind the Pro Rata rule for the Backdoor conversion, as of 12/31/2023 I had a $0.00 in my Traditional IRA. 
3. My 2022 form 8606 reported that I have a basis in Traditional IRA of $2,236.

This year, I received 2 1099-R's for the 2023 Tax Year:

1. The first 1099-R reported the recharacterizing of the the Roth IRA to Traditional (with status code R)
2. The second 1099-R reported the backdoor conversion from Traditional IRA to Roth IRA

Questions:

1. Both 1099-Rs show taxable amounts (box 2a) of $2,223 and $2,246, respectively. This doesn't seem correct. Shouldn't I just be taxed on the ~$10 earnings of gains that occurred by leaving the recharacterized money in the traditional IRA before converting back to Roth?

[RobertB4444]

Here's how to enter a Backdoor Roth IRA conversion into TurboTax.  It's a complicated process and it will result in you not paying taxes on the converted amount if you do it correctly.

@acandero 

[fanfare]

recharacterization: the original amount to the first IRA you report as contribution to the second IRA, earnings move but are ignored.

--

You should not pay any tax on the recharacterization.

"My 2022 form 8606 reported that I have a basis in Traditional IRA of $2,236"

That's correct but, how did that happen? 

Did you amend your 2022 tax return?

@acandero 

[acandero]

@fanfare 

>"My 2022 form 8606 reported that I have a basis in Traditional IRA of $2,236"

>That's correct but, how did that happen? 

A: Are you referring to having a basis? If so, I'm not sure. Does this mean I filed my tax 2022 return incorrectly? Or are my 20231099-R's incorrect?

On my 2022 8606 Form:

Line 1 (nondeductible contributions to traditional IRAs for 2022) = $2,236

Line 2 (total basis in traditional IRAs) = $0

Line 14 (total basis in traditional IRAs for 2022 and earlier years) = $2,236

>Did you amend your 2022 tax return?

A: No, I have not.

[fanfare]

Assuming you import 2022 into 2023,

and the amount from Line 14 carries forward (or you make the entry manually),

you can just toss the 1099-R with Code "R". you don't need it.

Keep for your records.

@acandero 

[fanfare]

"My 2022 form 8606 reported that I have a basis in Traditional IRA of $2,236"

Is still don't understand how that happened if you did not do it !

@acandero