How to indicate that a 1099-R form is a 2023 form when doing 2022 tax return?

[tta]

I'm trying following the instructions in Example 8 of the "IRA Recharacterization Examples" page (see screenshot below) in the "On Demand Tax Guidance" popup window in order to recharacterize a Roth IRA contribution as a Traditional IRA contribution but with extra earnings.

Example 8 have the same facts as Example 7: Robert contributes $3,000 to a Roth IRA at "Roth Trustee." After the end of the year but before he files his tax return, Robert learns that if he had contributed $2,500 to a traditional IRA, it would have been deductible. He elects to recharacterize the $2,500.

Example 8 (similar to my case)

The facts are the same as example 7, except that the $3,000 has earned 10%, or $300. After the end of the year but before he files his tax return, Robert learns that if he had contributed $2,500 to a traditional IRA, it would have been deductible. He elects to recharacterize the $2,500. Since the original contribution has earned 10%, he must transfer the $2,500 plus the earnings on the $2,500. He does a trustee-to-trustee transfer in 2023 of $2,750 ($2,500 plus $250 earnings) from "Roth Trustee" to "IRA Trustee." The $2,500 is considered to have been contributed to the traditional IRA on the date of the original contribution to the Roth IRA.

Robert does not receive a Form 1099-R. However, he expects to receive a 2023 Form 1099-R in January, 2024 from "Roth Trustee" showing $2,750 in box 1, no amount in box 2a, and code "R" in box 7. From his own records, he knows the amount that will be in box 1 is $2,750, the amount that was transferred.

Robert enters the transaction as follows:

Although Robert did not receive a Form 1099-R before he files his 2022 tax return, he must report the recharacterization transaction on his 2022 return. Robert enters a Form 1099-R even though he did not actually receive one. He only needs to enter the payer information, the amount transferred ($2,750) in box 1, and code "R" in box 7. He must then indicate that the 1099-R is a 2023 form.

When Robert receives the 2023 Form 1099-R in January, 2024, he does not report it on his 2023 tax return since it has already been reported on his 2022 tax return.

He makes no entry on the "Traditional IRA Contribution" screen or the "Recharacterize to a Roth IRA" screen.

He enters the regular Roth IRA contribution of $3,000 on the "Roth IRA Contributions" screen. On the "Recharacterize to a Traditional IRA" screen, he enters $2,500, not $2,750 as the "Recharacterized contribution." He also completes the explanation statement. The statement should say that $2,750 was transferred from the Roth to the traditional IRA, that $2,500 was the original contribution amount and that $250 was earnings, and that the $2,500 amount is now deductible.

------------------------------

My question is this: How to indicate that the 1099-R form is a 2023 form when doing my 2022 tax return? When I go into the Forms mode and bring up Form 1099-R, the form is already set to a 2022 form. There is no way to "indicate that the 1099-R is a 2023 form".

Please help. Thank you.

IRA Recharacterization Examples

[DanaB27]

You don't need to enter a 2023 Form 1099-R with code R. A Form 1099-R with code R will change nothing on your return. You can only report the recharacterization as mentioned below. Therefore, you can ignore Form 1099-R with code R when you get it in 2024. Box 1 on the 1099-R will report the total recharacterized amount (contribution plus earnings) but it does not separately report the earnings and box 2a must be zero.

You will enter the recharacterization when you enter the contribution to the Roth IRA on your 2022 tax return:

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. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (if you are thinking about doing a backdoor Roth. If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

[tta]

Thank you so much @DanaB27 for your instructions.

I'd like to suggest TurboTax rewrite the examples in the "IRA Recharacterization Examples" page (from the "On Demand Tax Guidance" popup window) because they actually give wrong instructions.

May I ask one follow-up question: In Step 10, you said on the screen "Choose Not to Deduct IRA Contributions", I should answer "Yes". However, the $6000 contribution to the Traditional IRA is deductible in my case, so I should answer "No", correct?

[DanaB27]

It depends if you plan to convert the funds to a Roth IRA (backdoor Roth) then you will select “Yes”. But if you plan to keep the funds in the traditional IRA then you will say “No”.

@tta