topic 2017 Roth IRA recharacterized in 2018. 2017 8606 was filed. Received two 1099-Rs for 2018. Turbotax printing 5329? in Get your taxes done using TurboTax

2017 Roth IRA recharacterized in 2018. 2017 8606 was filed. Received two 1099-Rs for 2018. Turbotax printing 5329?

nmsu_aggie — Fri, 04 Oct 2019 02:57:28 GMT

I contributed $5500 to Roth IRA in January 2017. Got married and exceeded the limit. The 2017 contribution was recharacterized to non-deductible traditional IRA contribution in 2018 prior to filing 2017 tax return. I then converted back to Roth IRA with a small gain. 2017 tax return reported the recharacterization/non-deductible contribution on form 8606.

I received 1099-Rs for both steps in 2018 - entered both into TurboTax for 2018. (Recharacterization out of Roth 1099R has box 2a with zero and 7 marked R/ conversion from trad. to roth 1099R has box 7 marked 2 and IRA/SEP/SIMPLE box checked). Form 8606 appears to be calculating correctly, showing only the gain over $5500 as taxable - no problem there. However, Turbotax is printing form 5329 with an amount of $5500 on line 18 as carryover from 2017 form 5329. No form 5329 was filed in 2017. How can I get this to be removed? Because of this, a 6% penalty on the $5500 is being calculated and added to my return, which I believe to be is incorrect. I read elsewhere there was a bug related to box 7 being marked 1 - not my issue since my box is marked R, but perhaps a similar bug?

Also, for confirmation, when entering the recharacterization 1099R, TurboTax prompts that I need to amend 2017 - this is not correct since I have already filed the necessary 8606 in 2017 as required?

Thanks in advance.

Re: 2017 Roth IRA recharacterized in 2018. 2017 8606 was filed. Received two 1099-Rs for 2018. Turbotax printing 5329?

dmertz — Fri, 04 Oct 2019 04:21:49 GMT

Revisit the Traditional and Roth IRA contributions section in 2018 TurboTax. Make sure that the Roth IRA box is marked, then step through until you pass the Roth IRA basis entry section and TurboTax will present the Enter Excess Contributions page where it will show the amount that is appearing on Form 5329 line 18. Delete that entry.

(It's not clear how that amount came to be on line 18. Perhaps you previously misunderstood the entry being requested on the Enter Excess Contributions page and you entered the amount yourself. Because you corrected the excess Roth IRA contribution by recharacterizing, you made no excess Roth IRA contribution.)

Re: 2017 Roth IRA recharacterized in 2018. 2017 8606 was filed. Received two 1099-Rs for 2018. Turbotax printing 5329?

nmsu_aggie — Fri, 04 Oct 2019 04:46:16 GMT

You hit the nail on the head! Made that change and everything appears to be correct. 5329 is now gone.

Thanks a million!