Reversing Backdoor Roth and lines 4a and 4b

[johannes2]

Hi,

I really appreciate any help anybody can give me.

In January 2024 I moved $8K to IRA, then converted to Roth a few days later ($8,002.32).  I realized my IRA contribution was not allowed because I don't have earned income (retired end of 2023), so I called my broker who said no problem they can remove the deposit and gains, so last week they transferred about $10,200 back into my regular brokerage account.  Even though Roth "can't be undone", they said ok to pull back because the IRA deposit itself was invalid since I had no earned income.  I do have 1099-R for this but assumes nothing being undone.

Now I can't figure out what to do in TurboTax.   IRA Form 8606 instructions page 6 "Return of IRA Contributions" says "Don’t report the contribution or distribution on Form 8606 or take a deduction for the contribution. However, you must include the amount of the distribution of the returned contributions you made in 2024 and any related earnings on your 2024 Form 1040, 1040-SR, or 1040-NR, line 4a. Also include the related earnings on your 2024 Form 1040, 1040-SR, or 1040-NR, line 4b. Attach a statement explaining the distribution. "  

Sounds good, so I would enter $8K on 4a and $2,300 on 4b, but TT won't let me do this.  If I click to source, eventually it makes me do a 1099-R, but even if I fill one out by hand TT seems to ignore line 2a of the 1099-R and put line 1a into my 1040 line 4b (taxable) amount, which is wrong.  I tried changing various options on 1099-R and it doesn't make a difference.

What is the correct way for me to handle this situation? 

Thanks in advance for everybody's help, I really do appreciate it.

PS: Maybe extra complication for 1099-R codes.  Did this for both myself and my wife, in Jan 2024 I was over 59 1/2 but my wife was not (although she is now). 

[johannes2]

I made up my own 1099-R with

1 gross distribution: put in total amount came out

2a taxable amount: put in the amount went up since putting in

2b taxable amount not determined: check

     total distribution: not checked (still some stuff in roth)

7 distribution codes:

    1st code: 8

    2nd code: blank

    IRA/SEP/SIMPLE: checked (not sure this is right)

16 state distrubution: same as line 1

I did type in a note explaining (as the 8606 instructions suggest).

Doing this resulted in 1040 line 4a being total distribution and 4b being the amount it went up before distribution, which is what I wanted.

IMPORTANT: This is what I did and it looks like it works, but I am a tax novice with no training and I am not confident I did this correctly, so please be careful.