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Should I file an IRA amendment for 1099-R for prior year?

Forum|Forum|2 years ago
February 25, 2024
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Hi, tax experts,

In 2022, I contributed $6,000 to my Roth IRA, which I recharacterized to a traditional IRA in March 2023. The recharacterized amount, including earnings, was $8,400. Initially, I believed that I had over-contributed to my traditional IRA since the total amount exceeded the $6,000 annual limit. Consequently, I withdrew the excess $2,400, which resulted in taxes and penalties on the earnings. Here are the details.

- 06/2022: Contributed $6000 to Roth IRA
- 03/2023: Recharacterized $8,400(Roth IRA contribution plus earnings) from Roth IRA to traditional IRA due to high income.
- 03/2023: Withdrew $2400 from traditional IRA for 2022 because I mistakenly thought I had made an excess contribution to traditional IRA.
- 04/2023: Report the recharacterization without 1099-R and report the withdrawal by filing Form 4852 with code 1 and 'P', a substitute for 1099-R.
- 01/2024: Received two 1099R forms for the $8400 recharacterization and the $2400 withdrawal, marked with codes 1 and 8.

My questions are

- Should I file an amendment for both the recharacterization and the withdrawal, which were for 2022 but were done in 2023?

-If I should, how to file an amendment?

I really appreciate if anyone can help me with these questions. Thank you!

Best answer by DanaB27

You can ignore the Form 1099-R with code R for the recharacterization. A Form 1099-R with code R will do nothing to your return. The recharacterization should have been reported on your 2022 tax return with these steps:

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “Roth IRA”
Answer ‘Yes” on the “Roth IRA Contribution” screen
Answer “No” to “Is This a Repayment of a Retirement Distribution
Enter the Roth contribution amount $6,000
Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount of $6,000 (no earnings or losses) on the next screen.
TurboTax will ask for an explanation statement where it should be stated that the original $6,000 plus $2,400 earnings were recharacterized.

They should have send you a Form 1099-R with code P and 1 for the return of a 2022 contribution plus earnings but since they send you Form 1099-R with code 8 and 1 you want to enter it on your 2023 return and amend your 2022 return to remove the Form 1099-R with codes P and 1. Please be aware you do not have to pay the 10% early withdraw penalty on the earnings. The tax law regarding this was changed starting December 29, 2022.

Click "Continue" after all 1099-R are entered and answer all the questions.
Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please see How do I amend my federal tax return for a prior year?

D

DanaB27Answer

You can ignore the Form 1099-R with code R for the recharacterization. A Form 1099-R with code R will do nothing to your return. The recharacterization should have been reported on your 2022 tax return with these steps:

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “Roth IRA”
Answer ‘Yes” on the “Roth IRA Contribution” screen
Answer “No” to “Is This a Repayment of a Retirement Distribution
Enter the Roth contribution amount $6,000
Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount of $6,000 (no earnings or losses) on the next screen.
TurboTax will ask for an explanation statement where it should be stated that the original $6,000 plus $2,400 earnings were recharacterized.

They should have send you a Form 1099-R with code P and 1 for the return of a 2022 contribution plus earnings but since they send you Form 1099-R with code 8 and 1 you want to enter it on your 2023 return and amend your 2022 return to remove the Form 1099-R with codes P and 1. Please be aware you do not have to pay the 10% early withdraw penalty on the earnings. The tax law regarding this was changed starting December 29, 2022.

Click "Continue" after all 1099-R are entered and answer all the questions.
Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please see How do I amend my federal tax return for a prior year?

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

D

diaolilinAuthor

Thank you for your prompt response!

Can you confirm the following steps I should take?

I don’t need to file the 1099-R with code R for recharacterization in the 2023 return since it’s been reported in the 2022 return.

I should include the 1099-R with codes 1 and 8 in the 2023 return.

After the return is accepted, I should amend the 2022 return by removing the 1099-R with code 1 and P.

In addition, I have a question for the withdrawal. Since I’ve already paid the 10% penalty in my 2022 return, should I amend the 2022 return or file the 2023 return to get it back? How?

I really appreciate your help!

D

DanaB27

Yes, you don’t need to file the 1099-R with code R for recharacterization in the 2023 return since it’s been reported in the 2022 return.

Yes, you should include the 1099-R with codes 1 and 8 in the 2023 return.

Yes, you should amend the 2022 return by removing the 1099-R with code 1 and P.

You will need to amend your 2022 tax return to get the 10% penalty payment refunded. You will need to remove the Form 1099-R with code 1 and P and then TurboTax will remove the penalty.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

D

diaolilinAuthor

Thank you!

I do enter all 1099-Rs and answer all the questions. But when I continue , I don't see the "Did you use your IRA to pay for any of these expenses?" screen and hence can't enter the amount of earnings under "Corrective distributions made before the due date of the return". Why?

The good news is that filing the 1099-R for $2400 withdrawal with code 1 and 8 doesn't change my tax refund. Should I still report the earnings under "Corrective distributions made before the due date of the return"?