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Level 1
posted Apr 10, 2022 1:01:57 PM

TurboTax doubling my IRA contributions

I contributed $7000 (my maximum) to a Roth IRA February '22.  I recharacterized this contribution as one to a traditional IRA.  After answering all the TurboTax questions correctly, (recharacterized? Yes. Contributed between 1/22 and 4/18/22? Yes.)  it shows that I contributed $14,000 instead of the $7000.  IRS instructions say that a proper recharacterization should be reported under the IRA it was recharacterized to (the tradional IRA,) and not the original IRA.  What's up with this?

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1 Best answer
Expert Alumni
Apr 11, 2022 7:26:34 AM

To clarify, you made a $7,000 Roth contribution for 2021 in 2022. Realized you cannot contribute to Roth and recharacterized the 2021 contribution as a traditional IRA contribution. Do not enter anything under the traditional IRA during the interview. Please review the steps below.

 

You will enter the recharacterization when you enter the contribution to the Roth IRA and TurboTax will report it correctly:

 

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions” 
  3. Click on “Jump to IRA contributions"
  4. Select “Roth IRA”
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution
  6. Enter the Roth contribution amount of $7,000
  7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount of $7,000 (no earnings or losses)
  8. 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.
  9. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if 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)

 

You will get Form 1099-R  for the recharacterization with code R-Recharacterized IRA contribution made for 2021 and this belongs on the 2021 return. But a Form 1099-R with code R will do nothing to your return. You can only report it as mentioned above. Therefore, you can ignore the Form 1099-R with code R when you get it in 2023. 

2 Replies
Expert Alumni
Apr 11, 2022 7:26:34 AM

To clarify, you made a $7,000 Roth contribution for 2021 in 2022. Realized you cannot contribute to Roth and recharacterized the 2021 contribution as a traditional IRA contribution. Do not enter anything under the traditional IRA during the interview. Please review the steps below.

 

You will enter the recharacterization when you enter the contribution to the Roth IRA and TurboTax will report it correctly:

 

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions” 
  3. Click on “Jump to IRA contributions"
  4. Select “Roth IRA”
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution
  6. Enter the Roth contribution amount of $7,000
  7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount of $7,000 (no earnings or losses)
  8. 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.
  9. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if 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)

 

You will get Form 1099-R  for the recharacterization with code R-Recharacterized IRA contribution made for 2021 and this belongs on the 2021 return. But a Form 1099-R with code R will do nothing to your return. You can only report it as mentioned above. Therefore, you can ignore the Form 1099-R with code R when you get it in 2023. 

Level 15
Apr 11, 2022 8:06:47 AM

Make sure that you have not entered a traditional IRA contribution in addition to entering the Roth IRA contribution and indicating that the Roth IRA contribution was recharacterized.