Here are the details
2015 - 1000 in traditional IRA deposited in 2016 before April; (2015 contribution)
2016 - 1000 in traditional IRA deposited in 2017 before April (2016 contribution)
2017 - 1000 in traditional IRA deposited in 2017 (February 2017)
February 2018 - recharacterized 2017 traditional IRA to Roth and at the same time converted 2015, 2016 Traditional IRAs to Roth IRA.
When 2017 return was filed, reported recharacterization for changing my mind. Now I have 2 lines on 1099 R one showing distribution code of R and another showing Distribution code of 2. TT calculates taxes on the conversion amount as expected. There are earnings on IRA recharacterized to Roth but taxable amount on Recharacterized is 0. Are earnings upon recharacterization taxed? I don't think so and it does not look like TT taxed the earnings.
TT says I may have to amend my 2017 return. I do not think I have to. Am I correct?
Though I have one 1099-R, I reported as two 1099-R's in TT.
Is my reporting correct?
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You might have to amend the 2017 returns. It depends on what you originally reported. When you recharacterize a contribution, you are treating the original contribution as if it never happened. If you recognized this and did not take a $1000 deduction for your original 2017 IRA contribution, you do not need to amend the 2017 return, because you were already considering the original contribution to be a Roth contribution, and not a TIRA contribution.
You are correct about the growth. Since the recharacterization changes the nature of the original contribution to a Roth, your growth is also considered retroactively to be Roth IRA growth. Growth on a Roth IRA is tax-free unless you prematurely distribute the growth.
If you did report the $1000 deduction on your 2017 return, then you would amend the return because the recharacterization disallows the $1000 deduction.
As far as the reporting is concerned, that sounds correct. Your plan administrator may have reported both transactions on one form (Vanguard does this), but with two different box 7 codes you do want to report them as if they are separate 1099-Rs. In essence they are, because they are two different types of transactions.
You might have to amend the 2017 returns. It depends on what you originally reported. When you recharacterize a contribution, you are treating the original contribution as if it never happened. If you recognized this and did not take a $1000 deduction for your original 2017 IRA contribution, you do not need to amend the 2017 return, because you were already considering the original contribution to be a Roth contribution, and not a TIRA contribution.
You are correct about the growth. Since the recharacterization changes the nature of the original contribution to a Roth, your growth is also considered retroactively to be Roth IRA growth. Growth on a Roth IRA is tax-free unless you prematurely distribute the growth.
If you did report the $1000 deduction on your 2017 return, then you would amend the return because the recharacterization disallows the $1000 deduction.
As far as the reporting is concerned, that sounds correct. Your plan administrator may have reported both transactions on one form (Vanguard does this), but with two different box 7 codes you do want to report them as if they are separate 1099-Rs. In essence they are, because they are two different types of transactions.
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