Roth Ira Conversion and Capital Gains Taxability

[todtbod]

In 2019 I converted About $50K of my traditional IRA to a Roth.  I did this because I didn't work in 2019 and wanted to take advantage of my low tax rate.

I also, sold some investments knowing that $39,375 of capital gains and qualified dividends would be exempt from tax.

Upon completing my 2019 federal taxes in TurboTax, the tax owed is significant ($13K) and I think it has to do with the Roth conversion.  I expected to pay 10 to 12% on the Roth conversion, $5 to 6K, and then nothing on my capital gains/dividends.  It seems like there is a limitation on the $39,375 capital gains/dividend exclusion per the Schedule D Tax Worksheet.

Can I reverse the conversion to the Roth and put it back into a traditional IRA before I file my return?

Any help would be appreciated.

[AnnetteB6]

Unfortunately, you cannot reverse the conversion to the Roth.  This would be called a recharacterization and under the Tax Reform changes, recharacterization of a Roth conversion is not allowed starting in 2018.  

Take a look at the following TurboTax article for more information:  

What's the difference between a conversion and a recharacterization?

Also see:  IRA FAQs - Recharacterization of IRA Contributions

[todtbod]

Thanks Annette.  Can you comment as to why I don't seem to be able to take advantage of the $39,375 exclusion on my qualified dividends and capital gains per my original post?