Question

Total Basis in Traditional IRA due to re-characterization

Forum|Forum|2 years ago
April 2, 2024
1 reply
0 views

For 2022, I contributed $6000 directly in my Roth IRA but then later re-characterized when I realized I did not meet the income requirement. During this period, I had lost $390 to the market, thus my 8606 line 14 indicated my total basis in traditional IRAs for 2022 and earlier years was $390 on my 2022 tax return.

For 2023, Turbotax ask me what's my total basis as of Dec 31, 2022 based on form 8606, I entered $390 but I get a message saying "The IRA basis we transferred from 2022 is different from the basis entered. Include a brief explanation of why xx's IRA basis changed with your return."

Am I supposed to entered $0? Or included explanation that $390 was lost in market prior to re-characterization? Shouldn't this value be auto-transfer when I uploaded my 2022 tax return?

D

DavidD66

Your basis is $0. You should change it, and it should not ask you for an explanation after making the change. One would think it would rollover with a zero basis. I cant explain why it does not.

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

W

wchen0311Author

Will it have any issue if my 2022 8606 form line 14 has $390? (re-characterization loss during 2022).

SusanY1

To clarify, after you recharacterized to a traditional IRA did you take any deduction? Did you by any chance convert it back to a Roth after making the recharacterization to a nondeductible IRA (the "backdoor Roth")?

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