I contributed $6912 towards 2024 Roth IRA but was ineligible. In Jan 2025, I recharacterized Roth funds into traditional IRA & then did Roth conversion. How do I report?

Forum|Forum|1 year ago
February 18, 2025
1 reply
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When I realized my MAGI made me ineligible for a Roth, I immediately recharacterized my 2024 Roth contributions + gains to a traditional IRA in, then converted to Roth IRA to complete a "backdoor Roth conversion." The recharacterization & conversion all happened in Jan/Feb 2025. My question is - am I still going to incur a tax penalty for originally being in excess $6912 for my Roth, or did the recharacterization solve that issue? How do I enter this on turbo tax?

fanfare

Employee

recharacterization: the original amount to the first IRA you report as contribution to the second IRA, earnings move but that is ignored.
You must use a trustee-to-trustee transfer before the due date April 15,2025 ( or Oct 15, 2025 if 1040 was timely filed or extended).
You will instruct trustee to calculate the allocable earnings.

report this on your tax return for the year during which the contribution was made.
Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA.
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Upon reporting a Trad IRA contribution (non-deductible) on your tax return, you can then also report a Roth conversion of the contributed amount for net tax of zero, unless your IRA already had a basis.

In that case, it can't be done tax free.

@carpe_diem

carpe_diemAuthor

@fanfare I appreciate your reply!

On TurboTax, there are different sections where you can enter "2024 traditional IRA contributions" and "2024 (excess) Roth contributions." Since the full $6912 Roth funds were recharacterized into traditional IRA, does that mean I enter $6912 in "2024 traditional IRA contributions" and $0 in "2024 (excess) Roth contributions"? Thank you!