Question

How to report 1099s?- 2020 Recharacterization. Roth IRA to traditional, then backdoor to Roth IRA

Forum|Forum|4 years ago
March 15, 2022
1 reply
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In March 2021, I realized that I needed to back out my 2020 Roth contributions as my MAGI was too high. I did a recharacterization in March 2021 and moved the funds+earnings to a traditional IRA. I did a backdoor IRA into my Roth a few weeks later.

I needed to do this for 2 IRAs (husband/wife) and I now have 2 1099-Rs for each person. Ex below:

2021-R Gross Distribution $6,871.80. Taxable Amount $0. Distribution code R. Taxable amount not determined.

2021-R Gross Distribution $6,595.97. Taxable Amount $6,595.97. Taxable amount not determined (box checked). Distribution code 2. IRA/SEP/SIMPLE box checked.

Do I need to go back to my 2020 return and amend anything?

If I do, what is amended?

Thanks in advance

F

FangxiaL

It depends. As long as you did not enter the Roth IRA on your 2020 return (because of the 6% penalty), I don't believe you need to amend your 2020 return.

When you filed your 2020 return last year, if you entered your recharacterized Roth contribution as traditional IRA , the basis is reported on Form 8606. The 1099-R with distribution code R is the recharacterization made in 2021 for a 2020 contribution. Check your 2020 return to see if Form 8606 is filed to track the cost basis. If you did not take the deduction last year, your basis in the Traditional IRA should be $6,000 as of the end of 2020.

If you did not file Form 8606, you can prepare 8606 form and file by itself without amending your 2020 return.

Follow these steps to enter the conversion to Roth IRA (the 1099-R form with distribution code 2):

Enter the Conversion from a Traditional IRA to a Roth IRA

Inside TurboTax, search for 1099-r and select the Jump to link in the search results

Answer Yes to Did you get a 1099-R in 2021?, then Continue
- If you land on Your 1099-R Entries screen, select Add Another 1099-R
Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions
Answer None of these apply when you reach the screen Do any of these situations apply to you?
Select I converted some or all of it to a Roth IRA on the Tell us if you moved the money through a rollover or conversion screen
Next, choose Yes, all of this money was converted to a Roth IRA
Continue answering questions until you come to the Your 1099-R Entries screen

To check the results of your backdoor Roth IRA conversion, see your Form 1040:

On the left side of your screen, select Tax Tools, then Tools
Under Tool Center, select View Tax Summary
On the left side of your screen, select Preview my 1040
- Your backdoor Roth IRA amount should be listed on Form 1040, Line 4a as IRA distributions
- Taxable amount should be $595.97 because you had earnings between the time you contributed to your Traditional IRA and the time your converted it to Roth IRA, then the earnings would be taxable
Select Back on the left side of your screen to return to where you left off in TurboTax