How do I amend the 2022 return for Roth IRA corrective distributions before 2022 tax due date?

Forum|Forum|2 years ago
April 5, 2024
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Hi TurboTax Community:

I’m a CA resident and because of natural disasters, IRS has automatically extended the 2022 tax due date to Nov 16, 2023.

I contributed $6,000 (non-deductible) to the IRA and was planning to do a backdoor conversion. However, I made a mistake by recharacterizing the money to Roth IRA in June 2023. After realizing the mistake, I did an early withdrawal in Sep 2023 of the same amount ($6,000, no gain/loss) because my income has exceeded the MAGI limit.

Noticed that all these happened before the tax due date last year (Nov 16, 2023).

This year, I received 2 1099-R forms: [1] 1099-R for IRA (Box 7: R), [2] 1099-R for Roth IRA (Box 7: JP).

When filing my 2023 tax return, TurboTax has indicated that I need to amend my 2022 return.

My questions are:

How do I amend my 2022 tax return? Do I report both 1099-R forms (Box 7: R and Box 7: JP) in 2022? Or should I report the recharacterization (Box 7: R) in 2022 but early withdrawal (Box 7: JP) in the 2023 tax return?

And I should be exempted from any penalty since the contribution was non-deductible and I’ve made the corrective distributions before the due date, is this correct?

Thank you very much for your professional help!

Best answer by fanfare

"You wll attach a statement explaining why all that money is not to be taxed."

I said this because IRS instructions say to do it.

I think the program will, but if Turbotax does not offer a text box for explanation, you can still e-File without any explanation.

If IRS wants more information, they would ask for it.

@evanku

fanfare

Employee

the total of all distributions should appear on 1040 4a ( or 5a, if applicable ).

You wll attach a statement explaining why all that money is not to be taxed.

You said no gain/loss on the amount with code JP, therefore you do not have to amend.

@evanku

evankuAuthor

Thank you very much @fanfare, for your prompt reply and explanation!

It looks like I won't be able to do e-filing via TurboTax if I need to attach a statement with the explanation.

I'm also curious about this:

Just wondering, would it be a possible option to amend the 2022 tax return and report both 2023 1099-R forms (Box7: R and JP) there with an explanation? I think TurboTax will allow an explanation statement for the amendment. And not mentioning both 2023 1099-R forms in the 2023 tax return.

Or it's more advisable to report both 1099-R forms in my 2023 tax return as suggested because the contribution and withdrawal happened in 2023 and not reporting them can cause an alert from IRS?

Hope you don't mind, the reason I ask this is because when I fill in each of the 1099-R forms (for Box 7: R and Box 7: J) in the 2023 tax return, in both case TurboTax will indicate that I do need to amend my 2022 return, which makes me a bit nervous if I ignore TurboTax's suggestion, hence the question.

Once again, thank you very much for your professional help!! I really appreciate it!