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Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

Hi all,

 

Just a quick question.  I contributed $1000 accidentally to Roth IRA and later recharacterized it to Traditional.  I received a 1099-R for the Roth account.  Do I still report this on Turbotax and how do I appropriately report it? 

 

Thank you

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55 Replies
MinhT1
Expert Alumni

Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

Yes. You have to enter the form 1099-R which reports your Roth recharacterization.

 

Please follow the instructions in this TurboTax Help article on how to report this recharacterization,

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Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

@MinhT1 

 

Hi Minh, do I report the ORIGINAL 1099-R from the Roth in year 2020 even though I recharacterized it the following year in 2021 and received a new 1009-R with code R?  Thank you

MinhT1
Expert Alumni

Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

What was the "original" 1099-R for?

 

Re-characterizing your contribution means re-classifying the contribution as if it were a traditional IRA instead of a Roth. This must be done before the due date of your return. 

 

If you recharacterize a Roth contribution made in 2021, it must have done before April 15, 2022. 

 

If the characterization was made during 2021, you would receive a 1099_r for tax year 2021 with code N in box 7.

 

If the recharacterization took place in 2022 but before April 15, 2022, you would receive a 1099-R for tax year 2022 in January 2023 with code R in box 7.

 

So in both cases, there is no original 1099-R as you mentioned.

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Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

@MinhT1 

 

I just noticed the box "N" for my 1099-R for Roth.  I must report this correct and turbotax will know it was a recharacterization.  So does this recount as a contribution to my Traditional?  For example,

 

If i contributed $1000 directly to traditional in 2020, and then:

Recharacterized $1000 also in 2020,

 

My total contribution for traditional would be $2000, and my contribution to roth would be $0 since I recharacterized this amount correct?  Thank you!

MinhT1
Expert Alumni

Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

Yes, you are correct. 

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Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

@MinhT1 

 

Hi Minh, thanks for the quick response.  I'm working on some prior year tax forms.  Under "Deductions and Credits" when it says to "Enter Your Roth IRA contributions" ----- Enter total Roth IRA contributions for 2020 even if you transferred, or "recharacterized" some or all of it to a traditional IRA"

 

When I click "LEARN MORE" it says to include any earnings.  Specifically, 

 

An annual contribution to a Roth IRA can be recharacterized as a traditional IRA contribution. The recharacterization must be for the same year the contribution was made. Also included in the transaction is any earnings attributable to the contribution while it was in the Roth IRA. The total of your contribution and the earnings attributable to your contribution is referred to as the amount "transferred."


I was told last year to just put the $1000 that I accidentally contributed to ROTH in 2020 and recharacterized in 2020, however on the 1099-R with code "N" the amount is $1237.24. 

 

Which amount do I put and what amount do I put on the next screen when it asks, "Tell us how much you Transferred"?"

 

Based on what I am reading the amount under "ENTER ROTH IRA CONTRIBUTIONS should be $1000, and the AMOUNT TRANSFERRED on the next screen should be $1237.24 due to gains on my 1099-R.  Is this correct?

 

Thank you

MinhT1
Expert Alumni

Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

Yes.

 

Roth contributions: $1,000

 

Amount transferred: $1,237.24

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Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

@MinhT1 

 

Thank you!  Seems like I have to amend my 2020 and 2021 returns.  I already amended 2020 last year and have to do it again.  Do I follow the same process, as this is the second time I am amending 2020?   Thank you

 

 

MinhT1
Expert Alumni

Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

You can amend a previously amended return. Just make sure that you start with the previously amended return. The process is the same as for a first amendment.

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Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?


@MinhT1 wrote:

Yes.

 

Roth contributions: $1,000

 

Amount transferred: $1,237.24


Hi @MinhT1 

 

Just to follow up with a separate question, it looks like when I enter the amount transferred of $1237 (which was recharacterized from the original $1000 contributed to ROTH), it added this amount of $1237 to my basis (line 1 form 8606) for 2020.  Is this true or should be only be $1000 contributed to traditional?

 

This is a totally separate question please just to help my understanding:

"TELL US THE VALUE OF ALL YOUR TRADITIONAL IRA ACCOUNTS"

- Enter or verify the value (ending balance amount) of all traditional IRA on December 31, 2020

- Include any IRA contributions made or will make in 2021 for 2020.

 

Would the above amount be just what I contributed in 2021 for year 2020, or include any outstanding recharacterizations i made in 2021 for 2020?  For example, $1000 directly contributed in 2021 for 2020 + $1000 recharacterized in 2021 for 2020?

MinhT1
Expert Alumni

Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

1. The amount transferred must include the earnings (i,e, $1237) and will be the nondeductible contributions reported on line 1 of form 8606.

 

2. "TELL US THE VALUE OF ALL YOUR TRADITIONAL IRA ACCOUNTS" This should also include the recharacterizations for 2020 made before April 15, 2021.

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Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

@MinhT1 

 

Thank you.  On line 4 of 8606, it says "enter those contributions on line 1 that were made from January 1 2021-april 2021"

 

If I contributed $1000 directly to traditional in 2021 for 2020, but recharacterized $1317 ($1000 contributed) in 2021 for a contribution that was made to Roth in 2020, would line 4 be $1000 or $2000?

 

I feel that this line should just include the $1000 nondeductible contributed directly to traditional in 2021 for 2020 based on my readings but just want to confirm.  Thanks! 

 

What part on the Turbotax interview fills out line 4 on 8606?

 

Thank you!

MinhT1
Expert Alumni

Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

Instructions for form 8696 say:

 

Treat any recharacterized IRA contribution as though the amount of the contribution was originally contributed to the second IRA, not the first IRA. For the recharacterization, you must transfer the amount of the original contribution plus any related earnings or less any related loss.

...Treat any earnings or loss that occurred in the first IRA as having occurred in the second IRA. You can’t deduct any loss that occurred while the funds were in the first IRA. Also, you can’t take a deduction for a contribution to a traditional IRA if you later recharacterize the amount.

 

2. You made a contribution to a Roth IRA and later recharacterized part or all of it in a trustee-to-trustee transfer to a traditional IRA. Report the nondeductible traditional IRA portion of the recharacterized contribution, if any, on Form 8606, Part I. Don’t report the Roth IRA contribution (whether or not you recharacterized all or part of it) on Form 8606. Attach a statement to your return explaining the recharacterization. If the recharacterization occurred in 2020, include the amount transferred from the Roth IRA on Form 1040, 1040-SR, or 1040-NR, line 4a. If the recharacterization occurred in 2021, report the amount transferred only in the attached statement, and not on your 2020 or 2021 tax return. 

 

As your recharacterization occurred in 2021, line 4 should be $1,317, Remember that you shoiuld treat any earnings that occurred in the first IRA (Roth) as having occurred in the second IRA (Traditional).

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Quick question: if recharacterized a Roth contribution, do you still have to report the Roth 1099-R in Turbotax?

“ If the recharacterization occurred in 2021, report the amount transferred only in the attached statement, and not on your 2020 or 2021 tax return. 

 based on the above statement isn’t putting $1317 on line 4 essentially reporting it on the 2020 tax return?

        

 

As your recharacterization occurred in 2021, line 4 should be $1,317, Remember that you shoiuld treat any earnings that occurred in the first IRA (Roth) as having occurred in the second IRA (Traditional).”

 

Awww man, thought I had it figured out.  Thanks for helping out.  What part of the TurboTax interview displays line 4 on the 8606 form?  I’m trying to figure out how I getting numbers on the 8606 from TurboTax.  

 

If I recharacterized $1317 ($1000 basis) in 2021 and also contributed $1000 in 2021 for 2020, wouldn’t line 4 be $2317?  It asks for contributions from the total of line 1 that were made in 2021.   Thank you

 

 

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