Do I have to file 2023 Amended Tax Return due to 2023 IRA recharacterization?

[TongH]

Hi - In March 2024, I did IRA Recharacterization for my 2023 IRA to change my original contribution from Roth to Traditional, and I reported this Recharacterization in my 2023 tax return (with a statement as instructed by Turbotax) before I filed it.  In Jan 2025, I received 2024 1099-R from Fidelity to show this Recharacterization. 1099-R shows taxable income is 0 and box 7 shows R. Then in my 2024 tax return, Turbotax says I may need to file amended 2023 tax return because my 1099-R reports earnings on a contribution I made in 2023. But, do I have to file an amended tax return for 2023? I didn't actually get the money in neither 2023 or 2024 so I think it doesn't affect the tax amount. Thank you!

[BrittanyS]

Did you show the recharacterization on your 2023 return?  If you show the contribution on your return you will not need to amend the return.  TurboTax is just providing information that the contributions should have been entered there.  You should have followed these steps in 2023:

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 “Traditional IRA”
5. Answer ‘Yes” on the “Traditional IRA Contribution” screen
6. Answer “No” to “Is This a Repayment of a Retirement Distribution
7. Enter the contribution amount 
8. Answer “Yes” to the recharacterized question on the “Switch from a Traditional To a Roth 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.

If you did not report the recharacterization in 2023 you will amend the return by following these steps:

• You must first wait until the initial return is completely processed.
• You will have to use the same TurboTax account that you used for the original tax return.
• Once you begin your amendment, you'll see your original return.
• The refund calculator will start new at $0 and only reflect the changes in the refund or tax due
• Only make changes to the areas of your return that need to be corrected.
• You have three years from the date you filed your return or two years after you paid the tax due (whichever is later) to file an amendment

Select your product below and follow the instructions. 

Amend TurboTax Online 

Amend TurboTax CD/Download 

[TongH]

Thank you for your quick response and the instructions!

Yes, I believe my 2023 return showed the recharacterization. It's an Explanation Statement generated by Turbotax "stated that the original $xxx.xx plus $xxx.xx earnings were recharacterized" as you mentioned.  It appears there was no Form 8606 generated for my 2023 return though? My understanding is that's because all my contribtion to traditional IRA was deductible...

Just a reminder that my 2023 Recharacterization was to change from Roth IRA to Traditional IRA, so that I can get more deductions to help get more tax refund for 2023.  So I'm a little confused why in step #8, you mentioned I should: "Answer “Yes” to the recharacterized question on the “Switch from a Traditional To a Roth IRA?” ?

Considering the above, if you could double confirm that I don't have to file 2023 amended return, that would be great! Thank you again!

[BrittanyS]

You are correct, you do not need to answer yes to question 8 if you went from a Roth to a Traditional.  Even with answer no to question 8 you would not need to file an amended return.  TurboTax puts the statement in just as a reminder that the recharacterization should have been filed with your 2023 return.  Since you did file this with your 2023 return, there is no need for you to amend.

[TongH]

Great! Thank you very much for all your help!