IRA basis and recharacterization

Dancingduck — Thu, 27 Feb 2025 06:24:58 GMT

I have a question regarding gains and losses in IRA basis.

For 2023 taxes I realize my 8606 form is incorrect and needs to be amended once again.

I contributed $3,000 to my Roth IRA which had to be recharacterized to a traditional because I got married. My total recharacterized with earnings was $3480. There were no other contributions made to any other traditional IRA.

Should my basis on my 8606 form be $3,000 or $3,480?

Re: IRA basis and recharacterization

DanaB27 — Thu, 27 Feb 2025 10:54:15 GMT

You basis is $3,000. When you recharacterize a Roth IRA contribution as traditional IRA contribution then the earnings are deemed to have been earned in the traditional IRA.

On your 2023 return you should have entered these steps to report the recharacterization:

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
Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount of $3,000 (no earnings or losses) on the next screen.
TurboTax will ask for an explanation statement where it should be stated that the original $3,000 plus $480 earnings (or loss) were recharacterized.
On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" if you are thinking about doing a backdoor Roth. Otherwise select "No". (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)

topic IRA basis and recharacterization in Get your taxes done using TurboTax

IRA basis and recharacterization

Re: IRA basis and recharacterization