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delaneylepak
Returning Member

Roth IRA Recharacterization and back door conversion

Hi Turbo Tax Community, 

 

In March of 2021, I made the following Roth IRA contributions:

 

1) $6,000 allocated for 2020.

2) $6,000 allocated for 2021.

 

In April 2021, I got a new job and am now above the income limit. 

 

As a result, in October 2021, I recharacterized $6,abc ($6,000 + interest) into a Traditional IRA.  

 

In December 2021, I converted $6,xyz (not the full $6,acb) of the traditional IRA balance to Roth IRA via the "back door" conversion. 

 

Any help is appreciated for how to reflect this in my taxes! Thank you so much!

3 Replies
DanaB27
Expert Alumni

Roth IRA Recharacterization and back door conversion

You will enter the recharacterization when you enter the contribution to the Roth IRA:

 

  1. Click on "Search" on the top right and type “IRA contributions” 
  2. Click on “Jump to IRA contributions"
  3. Select “Roth IRA
  4. Answer “No” to “Is This a Repayment of a Retirement Distribution
  5. Enter the Roth contribution amount 
  6. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount (no earnings or losses)
  7. TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
  8. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (since you are thinking about doing a backdoor Roth. If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

 

 

To enter the 1099-R conversion: 

 

  1. Click "Federal Taxes" on the top and select "Wages & Income"
  2. Click "I'll choose what to work on"
  3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)
  4. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
  5. Click "I'll Type it Myself"
  6. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
  7. Click "Continue" and enter the information from your 1099-R
  8. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account
  9. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
  10. On the "Your 1099-R Entries" screen click "continue"
  11. Answer "yes" to "Any nondeductible Contribution to your IRA?"
  12. Answer the questions about the basis from line 14 of your 2020 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

 

 

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delaneylepak
Returning Member

Roth IRA Recharacterization and back door conversion

Thank you - do I need to do anything re Traditional IRA?

DanaB27
Expert Alumni

Roth IRA Recharacterization and back door conversion

No, you do not enter anything under the traditional IRA. You will enter only your recharacterization and make it nondeductible in the IRA contribution section.

 

@delaneylepak

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