I received a Recategorize "R" coded 1099 R for 2021

[xiaogou0401]

I am currently doing my 2021 tax through turbotax premier, haven't submitted yet. I received a Recategorize "R" code 1099 R for 2021, total $9758 in box 1, "R" coded, it was due to the Roth IRA recategorize to Rollover IRA ( I contributed to Roth in 2020 but my income was over the limit and I was also filing married separately). I had it undone in 2021 through my brokerage and I received the Recategorize "R" code 1099 R for 2021 last month. Does that mean I need to amend my 2020 tax?  Can I still file my 2021 tax, or should I amend 2020 before I file 2021 tax? 

Thank you

[DaveF1006 · Accepted solution]

No you can still file your 2021 taxes without amending your 2020 return. You do not need to amend your 2020 return.

[xiaogou0401]

Thank you so much Mark. Two more questions:

1. Why I don't need to amend my 2020 return?

2. Can I do backdoor Roth IRA conversion while married filing separately? My income is over $10,000

Thank you so much. 

[RobertB4444 · Accepted solution]

1.  You don't need to do an amendment to your 2020 return because you didn't include the Roth rollover on your 2020 return since you were recategorizing it.  If you did include it and paid penalties for the contribution then you do need to amend the 2020 return in order to fix that.

2.  If you are filing married filing separate you may no contribute to a Roth at all unless you make less than $10,000

[xiaogou0401]

Regarding - 2.  If you are filing married filing separate you may no contribute to a Roth at all unless you make less than $10,000.

I am asking about doing a IRA then convert into Roth IRA - Backdoor Roth IRA ( it's a conversion, not a direct Roth contribution), in this case, can I do while doing married filing separately?

[DianeW777]

Yes. A backdoor Roth is not in the tax language at all even though the term has been created due to the income limits for contributing to a Roth IRA. Anyone can convert their eligible IRA assets to a Roth IRA regardless of income or marital status. The tax law hasn't caught up but they may in the future.

To contribute directly to a Roth IRA you would not be allowed.

• You can't make a Roth IRA contribution if your modified AGI is $144,000 or more. Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than zero. You can't make a Roth IRA contribution if your modified AGI is $10,000 or more.
• IRS Publication 590a
• IRA Rollover Chart

[DianeW777]

Yes. A backdoor Roth is not in the tax language at all even though the term has been created due to the income limits for contributing to a Roth IRA. Anyone can convert their eligible IRA assets to a Roth IRA regardless of income or marital status. The tax law hasn't caught up but they may in the future.

To contribute directly to a Roth IRA you would not be allowed.

• You can't make a Roth IRA contribution if your modified AGI is $144,000 or more. Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than zero. You can't make a Roth IRA contribution if your modified AGI is $10,000 or more.
• IRS Publication 590a
• IRA Rollover Chart

[Nan2C]

look into the 5 year rule so you will be educated when the time comes.

Also, be aware of the Pro Rata rule before you convert non deductible traditional IRA funds to a Roth IRA.

It isn't straightforward.  Get an education before doing it!

While you are reading the 590A IRS publication, get ahold of the 590B!