☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Level 2
posted Apr 9, 2022 6:00:50 PM

Roth IRA Recharacterization AND backdoor calculation help

I'd like to know how to specifically handle the situation of:

Recharacterizing from a Roth IRA into a traditional IRA (due to income limits, full $7000 plus spousal IRA too).  Both gained earnings, say to $8000 each.  Then Use the Backdoor to move the $8000 into a Roth IRA.

 

Instructions on how to do this are lacking or non-specific here in this help.  Also, I need to figure out why TT is not filling out the 8606 for me to file.  It seems like its in a loop.

I have the 1099-Rs inputted, that's easy, but cannot figure out how to use the Retirement section correctly to get results.

 

 

0 1 114
1 Replies
Expert Alumni
Apr 10, 2022 4:08:54 AM

If you made a Roth contribution for 2021 and recharacterized it in 2021 then you will enter the recharacterization when you enter the contribution to the Roth IRA on your 2021 return:

 

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions” 
  3. Click on “Jump to IRA contributions"
  4. Select “Roth IRA”
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution
  6. Enter the Roth contribution amount 
  7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount (no earnings or losses)
  8. TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
  9. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if 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 made a Roth contribution for 2020 and recharacterized it in 2021 then you will need to report it on your 2020 tax return with the above steps. TurboTax will create Form 8606 with a basis on line 14 to carry over to 2021. Please see How do I amend my 2020 return? if needed.

 

To enter your conversion:

 

  1. Click on "Search" on the top right and type “1099-R” 
  2. Click on “Jump to 1099-R”
  3. Click "Continue" and enter the information from your 1099-R
  4. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
  5. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
  6. On the "Your 1099-R Entries" screen click "continue"
  7. Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
  8. Answer the questions about the basis from line 14 of your 2020 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs.

 

 

 

@CCC261