Roth IRA - 2020 contribution recharacterized and converted in 2021 (post tax filing) + backdoor, 1099-R received in 2022

[user_007]

Hi, 

I spent many hours reading about it, but couldn't find a definite answer. So, here is my situation, 

I contributed to ROTH IRA in 2020, then I field my taxes for 2020 in 2021.

Post filing my 2020 taxes in 2021, I realized that my AGI is over the limit and I wasn't eligible for ROTH IRA. So, I called my IRA provider and recharacterized it, and then converted it back to ROTH IRA. 

Now, in 2022 I received two 1099 R forms one form has the Distribution code "R" and another form has the distribution code "2". 

What are these two forms? And, how do I report it on my taxes? 

Since this recharacterization is for 2020 should I amend my 2020 returns? This doesn't change anything with respect to taxes, as the initial ROTH contribution is already post-tax and I just recharacterized it to traditional. 

Or as this is done in 2021 should I somehow report it on 2021 returns? 

Thank you. 

[FangxiaL]

Yes, you must amend your 2020 return to report the recharacterization so that Form 8606 can be generated to report the 2020 non-deductible IRA contribution. Use the 1099-R form with code R to amend your 2020 tax return. The 1099-R with a code R does not do anything - they just inform the IRS. 

Report the Roth conversion on your 2021 tax return using the 1099-R form with code 2.

[user_007]

Thanks for the information. For Amending, I did my 2020 taxes through TurboTax premier, can I amend my taxes through that? Or do I need to purchase the software again? Should I submit all the forms again or just 8086 form?

For the reporting Roth conversion on 2021 returns, so does this conversion fall under 2021 even though I did with recharacterized 2020 amount? Also I haven't contributed to ROTH for 2021.

[ErnieS0]

Conversions are recorded in the calendar year, so if your conversion took place in 2021, then you would report that on this year's taxes.

The recharacterization is reported in 2020, so amend your 2020 return.

Champ @macuser_22 has an excellent explanation in How to handle 1099-R with Distribution Code "R"? The example is for 2017 and 2018. Just change the dates to 2020 and 2021.

For help see How do I amend my 2020 return? 

[user_007]

Thanks for the response. Also, in my case, my IRA provider transferred the stocks from Roth IRA to Traditional IRA during Recharacterization, which was around $5980. So, in this case, my traditional IRA contribution is $5980. And, since it is stock, by the next day when I converted it back to Roth IRA, it gained in value $6060. So, now I am confused as I have converted more than $6000 to ROTH IRA. Should I file an excess return to remove an additional $60? Thank you. 

[RobertB4444]

Yes.  

You should contact your broker and have them take care of it.  Your broker should have known that the earnings needed to be removed at the same time when you made the initial withdrawal.