How to Report recharacterization and Excess Contributions Without 1099-R Forms

[Lilin]

I am seeking clarification on reporting my 2022 Roth IRA contributions and recharacterization to a traditional IRA, as well as the subsequent removal of excess contributions without receiving the related 1099-R forms until next year.

In 2022, I contributed $6,000 to my Roth IRA but later realized that I was not eligible due to high income. In March 2023, I recharacterized $8,341.8 (which includes a Roth contribution of $6,000 for 2022 and earnings of $2,341.8) from my Roth IRA to traditional IRA. I then removed $2,400 from the traditional IRA to avoid excess contributions.

I have the following questions regarding how to report these transactions without the 1099-R forms:

1. Should I fill out a 1099-R form or a substitute 1099-R (Form 4852)? I am aware that filing a substitute form might increase the likelihood of an IRS audit.
2. Which distribution code should I choose? 8 or P? It seems that 8 is more appropriate since the withdrawal is the return of contribution in 2022.
3. The gross distribution is $2,400, of which $2,342.20 is the earnings on contribution. Where should I report the $2,342.20? Should it be entered in "2a-Taxable amount", "3-Capital gain", or both? Also, is the amount in "2a-Taxable amount" $2,400 or $2,342.20?
4. I attempted to create a 1099-R form as follows:

1-Gross distribution: 2,400

2a-Taxable amount: 2,342.20

2b-Taxable amount not determined: checked

3-Capital gain: 2,342.20

7-code: P

The IRA/SEP/SIMPLE: checked

However, I did not find any additional 10% penalties on the earnings. I am 48 years old and should be subject to penalties. But the Form 5329 was not triggered after I filled out the 1099-R. Therefore, there is no penalty information on Form 5329 and 1040. How can I report the 10% penalties in Turbotax?

5. If there is a difference between the 1099-R I create for 2022 and the one that comes in 2024, should I amend it next year?

6. If I choose to wait until 2024 to report the removal of excess contribution, should I do anything else except reporting the withdrawal in "Deduction & Credits - Traditional and Roth IRA contribution"? Is there any interest on the delayed taxes and penalties on the earnings of $2,341.8?

7. For the recharacterization, should I fill out a 1099-R form in addition to entering an entry in "Deduction & Credits - Traditional and Roth IRA contribution"?

I would really appreciate if anyone can answer these questions, as the tax filing deadline is approaching. 

[RobertB4444]

Here is a great article an reporting excess Roth IRA contributions in TurboTax.

@Lilin 

[Lilin]

Thank you for your valuable recommendation! I have two more questions:

Since I do not currently have a 1099-R, which forms should I fill out, a 1099-R form or a substitute 1099-R (Form 4852) ? I understand that filling out a substitute form may increase the likelihood of an IRS audit.

For the recharacterization of my Roth IRA to a traditional IRA, do I need to fill out a 1099-R form?

I would appreciate your help.

[fanfare]

the actual amount for tax purposes that you recharacterized for 2022 was $6000. earnings don't count and you did not have to remove them from the Traditional IRA. 

This is why you are supposed to ask the custodian to remove excess and not try to do it yourself.

@Lilin 

[Lilin]

Thank you for clarifying!

But Turbotax indicated that I had to remove the excess contribution, otherwise I would have a 6% penalty. That's why I requested the custodian to make the removal. 

[fanfare]

If turbotax showed a penalty, you entered the wrong amount to report and/or answered some questions incorrectly.

@Lilin 

[Lilin]

Thank you for your explanation!

I am unsure where I went wrong in the process, but since I have already removed the excess contribution, there is nothing further I can do at this point.

Do you know which forms I should fill out, a 1099-R form or a substitute 1099-R (Form 4852), without an actual 1099-R?

Should I fill out a 1099-R form for the recharacterization?

[fanfare]

"I recharacterized $8,341.8 "

you don't need any 1099-R when you do a recharacterization.

recharacterization: the original amount to the first IRA you report as contribution to the second IRA, earnings are ignored.

tell TurboTax you contributed $6,000 into your Traditional IRA. (I'm assuming that 2,341.8 figure came from the custodians calculation on your $6,000 request.)

If you are under age 59 1/2, taking out  $2,341.8 is an early withdrawal that is penalized.

@Lilin 

[Lilin]

I really appreciate you taking the time to answer my questions. Thank you!