Question

Recharacterization in 2022 for 2021 Tax Year showing excess contribution for 2022

Forum|Forum|3 years ago
March 26, 2023
1 reply
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In 2021 I contributed $4500 to a traditional IRA and $1500 to Roth IRA. Because of an unexpected income increase, I was no longer eligible for Roth contribution. While preparing my 2021 taxes last year I recharacterized my Roth contribution of $1500 plus gains (total of $1,673) to my traditional IRA prior to 4/15/2022.

For tax year 2022 I contributed $6000 to my traditional IRA. I received a 1099-R for my Roth IRA showing $1,673 distribution. I linked my accounts to TurboTax and it's telling me I made an excess contribution to my traditional IRA of $1,673 for 2022 and need to pay the excess contribution penalty. Since this was recharacterized for 2021 how do I make sure it's being captured correctly and I don't incur the penalty?

I also contributed the max to my IRA for 2023 already and don't want to keep having this issue going forward.

Not A Product Question

D

DanaB27

You shouldn't have an excess contribution as long as you had enough taxable compensation. To confirm you only entered the $6,000 traditional IRA contribution for 2022 and no other contribution in the IRA contribution interview. Do not enter the amount from Form 1099-R as a contribution.

For your information, you can ignore 2022 Form 1099-R with code R-Recharacterized IRA contribution made for 2021 and this belongs on the 2021 return. But a Form 1099-R with code R will change nothing on your return therefore you can ignore it. You only can report the recharacterization in the IRA contribution interview of your 2021 tax return (and it seems you did that).

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