Clarification on Reporting Recharacterized IRA Contributions and Excess Contribution Removal on Tax Return

[necro]

I need clarification on how to report recharacterized IRA contributions and the removal of excess contributions on my 2024 tax return. Here's a summary of the timeline and the details of my situation:

January 2024: I contributed $7,000 to my Roth IRA.

December 2024: I recharacterized $8,539 from my Roth IRA to a Traditional IRA.

March 2025: The excess contribution amount was determined to be $7,000, with a total earnings/loss of (-$250.06). I will receive a total of $6,749.94 from the Traditional IRA.

2. 

(1) I received a 1099-R on Jan 2025 for the recharacterization in 2024 with 'N' in Box 7. This appears to be related to a recharacterized IRA contribution for the year 2024.

Box 1: The total distribution amount. $8,539

Box 7: 'N' – Recharacterized IRA contribution made for 2024, recharacterized in 2024.

(2) I will receive a 1099-R for the excess contribution removal in early 2026. However, I plan to report this on my 2024 tax return.

Here's my question regarding the 1099-R forms:

Box 1: $6,749.94 – Total Distribution (Contribution $8,000 minus the loss)

Box 2a: $0

Box 7: P and 1

(1: Early distribution (except Roth), no known exception & P: Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2023)

Check the "IRA/SEP/SIMPLE" Box: I received a distribution from a Traditional IRA.

Which year on Form 1099-R? 2025

My question is:

1. When filing my 2024 tax return, should I report both the 1099-R with 'N' in Box 7 (1) and the 1099-R with 'P' and '1' in Box 7 (2) together, or should I only report the 1099-R with 'P' and '1' in Box 7 (2) for the excess contribution removal?

I want to ensure that I’m correctly reporting both the recharacterization and the excess contribution removal.

2. I opened a Traditional IRA for the purpose of recharacterizing my Roth IRA contribution, so the Traditional IRA was empty at first. I requested the return of the excess contribution of $7,000 from the Traditional IRA, but since there was a loss, I only received $6,749.94. I’ve been told that the remaining amount, the earnings from the recharacterization process, is not part of the return and is not being refunded.

The remaining balance in the Traditional IRA is part of the recharacterized amount, and since it is not an excess contribution, there is no need for a return. It stays in the Traditional IRA. This part is not subject to a return, and I believe this is the correct understanding, but I’m not completely sure.

Any guidance on the correct approach would be greatly appreciated.

Thank you!

[DanaB27]

1. Yes, you will report both Forms 1099-R, one with code N and one with code P and 1.

2. The earnings you had before you recharacterized the Roth IRA contribution as a Traditional IRA contribution are deemed to have been earned in the Traditional IRA because of the recharacterization (IRS). Therefore, all earnings from the time you made the Roth IRA contribution until you removed the excess from the Traditional IRA should have been considered as part of the earnings when you requested the withdrawal of excess contribution plus earnings.

You will enter the recharacterization when you enter the contribution to the Roth IRA: 

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 ‘Yes” on the “Roth IRA Contribution” screen
6. Answer “No” to “Is This a Repayment of a Retirement Distribution
7. Enter the Roth contribution amount 
8. Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount (no earnings or losses) on the next screen.
9. 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.
10. Continue until the penalty screen and enter the excess contribution amount withdrawn.