Question about a 1099R form

Maple46

During 2023, I contributed to a Roth IRA without realizing that I was over the income limit until 2024. I then took the entire excess contribution and the gains and put it into a traditional IRA during 2024. For my 2023 taxes, I filled out an 8606 with the amount of the excess contribution (not the gains) on line 1 as a non deductible contribution to a traditional IRA for 2023.

For 2024, I received a 1099-R form from Vanguard with the amount of the excess contribution and gains that I moved from the Roth to the traditional IRA on line 1 as a gross distribution. The form has code “R” on line 7.

When I enter the information from the 1099-R into the software, it says “If you have a 2024 Form 1099-R  with distribution code R you would report it on your 2023 tax return.” Do I need to amend my 2023 tax return to include the gains, because only the excess contribution was included on the 8606 and not the gains?

Is it correct on the next screen to select that all of the amount was rolled into a qualifying retirement account making none of this taxable? It says that code “R” is unusual.

rachels

Hi Maple46,

For 2024 forms, Code R in box 7 of your 1099-R form indicates a recharacterized IRA contribution made for 2023 and recharacterized in 2024. If your 1099-R shows 2024 on it, then you would not enter it in your account for 2024 at all. Instead, that would only be entered on a 2023 tax return, which may mean amending your 2023 return.

If your recharacterization was already reported on your 2023 return, including handling the gains that were also distributed, you may not need to amend 2023. However, if the recharacterization and gains were not properly handled on the original 2023 return, you may need to amend that return to report the 1099-R.

If you are not sure whether that was included on your 2023 return, you can log into your FreeTaxUSA account and contact our customer support team for help with your specific return.

If you determine that you need to amend your 2023 return, please go to our homepage and click the "Prior Year" link at the top of your screen. You can select 2023 and log in. You will then be able to select the option to amend that return.

For more information on how your situation is handled in our software, please see this related article.