Hello: Near the end of 2023, my wife and I both made a traditional to roth ira conversion. I entered the amounts for my wife and myself ($6500 each). And the software shows a $0 credit, which is of course correct. But then, upon importing the 1099Rs today, it took out taxes for the gross distributions of the total amount in each account (this number is in both boxes 1, 2, and 16. I had been thinking that this wouldn’t lead to an increase of taxes over and above the income that had already been recorded, seeing as I had already made it clear that the Traditional IRAs had been converted to Roth (the software uses the term ‘recharacterized,’ even as I didn’t think that was the appropriate term here). At any rate, based on this does anyone have any insight into whether this is correct or if I might have mis-entered something, resulting in getting double-taxed?
Yes, sounds like you are being taxed twice. If you manually entered the conversions then downloaded the forms 1099-Rs then the transactions are entered twice. Because the Form 1099-R is used to report distributions/recharacterizations, that download recorded the transactions again on your tax return.
To fix this, you can delete either your manual entries or the downloaded forms 1099-R. Here is how:
To delete an income item, I suggest deleting your manual entries, follow the steps below.
An IRA recharacterization treats a contribution made to one type of IRA as having been made to a different type of IRA. For more information use this link: What is an IRA Recharacterization
For additional information, click this link: Now Everyone Can Convert to a Roth