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Which year do I enter a "backdoor Roth" conversion? I contributed to a Roth last year, recharacterized to Traditional early this year, and then converted back to Roth.

Forum|Forum|6 years ago
March 24, 2020
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I have been contributing to a Roth IRA for years but turned out to be ineligible (income too high) in 2019. To avoid the penalty, I recharacterized the entire 2019 amount to a Traditional IRA in March 2020. I then converted it all back to a Roth ("backdoor" style) shortly after. Do I need to enter this backdoor conversion in my 2019 taxes, or only next year? Not sure if I should select that I contributed to a Traditional IRA, since technically, I did not.

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Best answer by dmertz

The Roth conversion performed in March 2020 goes on your 2020 tax return. Only the original Roth IRA contribution for 2019 and its recharacterization get entered into 2019 TurboTax (with the result being a traditional IRA contribution reported on your 2019 tax return).

D

dmertzAnswer

Employee

The Roth conversion performed in March 2020 goes on your 2020 tax return. Only the original Roth IRA contribution for 2019 and its recharacterization get entered into 2019 TurboTax (with the result being a traditional IRA contribution reported on your 2019 tax return).

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UserT1234Author

Thank you!

DaveF1006

You will report his in your 2020 tax return if you did the conversion this year (2020).

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macuser_22

Employee

@UserT1234 wrote:
Not sure if I should select that I contributed to a Traditional IRA, since technically, I did not.

Actually you did. A Roth recharactorization to a Traditional IRA is treated as if the Roth contribution never occurred and the contribution was to the Traditional IRA in the first place. But you do not enter it as a Traditional IRA contribution, you enter as Roth contribution that was "switched" to a Traditional IRA (recharactorized) and then check that it was a non-deductible contribution and enter an explanation statement. You should receive a 2020 1099-R next year with a code R in box 7.

A 2020 1099-R with a code R in box 7 (Recharacterized IRA contribution made for 2019 and recharactorized in 2020) will tell you that you must amend 2019.

A code R 1099-R does nothing whatsoever if entered into the 1099-R section of an amended 2019 return. It does not get sent to the IRS and nothing goes on the tax return at all. The only purpose of the 1099-R is to report the recharacterization to the IRS, but it still must be reported on your 2019 tax return.

The box 1 on the 1099-R will report the total recharacterized amount (contribution plus earnings) but it does not separately report the earnings and box 2a must be zero.

The proper way to report the recharacterization and earnings which is to enter the 2019 IRA contribution in the IRA contribution interview section and then say yes to "Did you switch from a Roth to a Traditional IRA - recharacterize".

The amount The amount of the original Roth contribution must be entered - not any earnings or losses.

Then TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharactorized.

There is no tax or penalty on the before-tax earnings since the earning were simply switched into the recharactorized account.

That is the only way to prepare and attach the proper explanation statement for a code R 1099-R.

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

Since the after-tax Roth contribution is now a Traditional IRA contribution it can be either a before-tax deduction if your MAGI allows a deduction which might result in an additional 2019 refund, or it will be an after-tax contribution reported on a 8606 form (line 1 & 14) as a "basis" in the Traditional IRA that will reduce the tax of future distributions.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**