topic 1099-R Taxable Issue in Get your taxes done using TurboTax

1099-R Taxable Issue

JPGup90 — Sun, 16 Feb 2025 01:11:02 GMT

Hello Everyone,

I have a 1099-R that has a 14000 value in box 1, 2b, and 2c is checked. My return is showing 7000 as my tax basis, but it should be $0 as its all conversion to Roth

How can I solve this? If i enter the 1099-R as is, this continues to be the tax liability assessed

Thank you!

Re: 1099-R Taxable Issue

KrisD15 — Sun, 16 Feb 2025 01:15:17 GMT

To clarify, Was this traditional IRA to Roth

Re: 1099-R Taxable Issue

JPGup90 — Sun, 16 Feb 2025 13:07:42 GMT

Yes that is correct

Re: 1099-R Taxable Issue

JohnB5677 — Sun, 16 Feb 2025 15:27:46 GMT

Please clarify your question.

What is the number in Box 2a?
What is the code in Box 7?
Did you get a full deduction on the original contribution to the Traditional IRA?
- Did you have a non-deductible portion from the Traditional IRA?

Please contact us again to provide some additional details.

Re: 1099-R Taxable Issue

JPGup90 — Sun, 16 Feb 2025 15:36:52 GMT

Box 1 and 2A are $14455.24. Box 2b is checked and the IRA/SEP/SIMPLE is as well. Distribution code is 2.

In 2023 I contributed the full $6500 into a Roth. Later I realized I had to much income and recharacterized to traditional in 2024 (before filing 2023 taxes). No deductions taken for any of the contributions

On top of the 1099-R I am mentioning, I do also have another for the recharacterization with 7440.63 in box 1, 0 in box 2a, unchecked box 2b, distribution code R.

My 1040 shows my taxable amount on IRA distribution to be 7440.63

Re: 1099-R Taxable Issue

JohnB5677 — Sun, 16 Feb 2025 16:55:01 GMT

Was the $14,455.24 a distribution in 2024 from the ROTH?

If so, this portion is not taxable.

Regarding the second 1099-R:

Code R is Recharacterized IRA contribution made for 2023.
This should not be on your 2024 tax return.
This is a taxable event. But it should be included on your 2023 tax return.
- Traditional IRA's are not taxed on the contribution, but they are taxed when withdrawn.
- ROTH IRA's are taxed upon contribution, and not taxed upon withdrawal.
If you created a substitute 1099-R and paid the tax in 2023,
- You do not have to enter the second 1099-R code R in 2024.
- You've already paid it.
If you did not enter it on your 2023 return you will have to amend it.

How do I amend my federal tax return for a prior year?

How to File an Amended Tax Return with the IRS

@JPGup90

Amended 02/16/2025 | 8:59 AM PST

Re: 1099-R Taxable Issue

JPGup90 — Sun, 16 Feb 2025 16:15:18 GMT

The 14445.24 was a conversion from traditional to Roth

For the second 1099-R it was a recharacterization of Roth to traditional. Flow was the below

2023: Contributed $6500 into Roth

2024: Recharacterized the 2023 $6500 contribution (now $7445.24) to Traditional

2024: Contributed 2024 $7000 contribution to Traditional

2024: Converted the $14445.24 from traditional to Roth

No tax was paid in 2023 as it looked like a normal 6500 traditional contribution

Re: 1099-R Taxable Issue

DanaB27 — Mon, 17 Feb 2025 15:13:34 GMT

The recharacterization should have been reported on your 2023 return and you should have a 2023 Form 8606 with a basis on line 14. This basis will have to be entered on your 2024 return.

On your 2023 return:

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

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “Roth IRA”
Answer ‘Yes” on the “Roth IRA Contribution” screen
Answer “No” to “Is This a Repayment of a Retirement Distribution
Enter the Roth contribution amount of $6,500
Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount of $6,500 (no earnings or losses) on the next screen.
TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings were recharacterized.
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.

If you did not enter this on your 2023 return and have no 2023 Form 8606 then you can amend your return.

A 2024 Form 1099-R for the recharacterization with code R-Recharacterized IRA contribution made for 2023 and this belongs on the 2023 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.

On your 2024 return

Please note, if you do not get the “Any Nondeductible Contributions to Your IRA?” screen to enter your prior basis from Form 8606 then please see Why is my backdoor Roth IRA conversion being taxed? to sign up for updates.

To enter the nondeductible contribution to the traditional IRA for 2024:

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “traditional IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution?”
Enter the amount you contributed
Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
Enter your basis in the Traditional IRA from your 2023 Form 8606 line 14 (if you had a basis in the prior year)
On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (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 Form 1099-R for the conversion:

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your 1099-R
Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
On the "Review your 1099-R info" screen click "Continue"
Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
Answer the questions about the basis from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs