How do I handle recharacterization/withdraw of my excess Roth IRA contribution if I filed already

Dough
Dough Member Posts: 3 Newcomer
in After you file

Hi all,

My wife contributed $6500 to her Roth IRA in June of last year (2025), and after filing taxes with FreeTaxUSA a month ago, I realized that contribution was made in excess due to unexpected raises in both of our jobs.

Even though I already filed for 2025, I contacted our financial broker and submitted a recharacterization form. This action removed the contribution (the $6500) and any earnings it had made (~$300).

Now, I am wondering what my next steps are?

I understand I will not receive a 1099-R until next January, but should I amend my return and state that we submitted a recharacterization? Or wait for that 1099-R

Embarrassingly, I have to admit I saw the warning about our Roth IRA contribution when filing our taxes and assumed it was something I could settle after filing, which may have been a mistake. Regardless, the record of making a contribution in excess is there as it stands, but not the recharacterization.

Last note: this is the only year that this has happened, and it is for 2025, this tax season. We don't have multiple excess contributions or an excess contribution from several years ago.

Thank you!

Again, in summary:

  • What are my next steps using this software?
  • Should I wait to amend until I receive a 1099-R?

Best Answer

  • GeorgeM
    GeorgeM FreeTaxUSA Agent Posts: 73 image
    Answer ✓
    Hello Dough:

    To follow-up on kiarab’s post, there is nothing else for you do at this point. As kiarab mentioned, you can amend your 2025 tax return now, assuming that tax return has already been accepted by the IRS, or you can wait until 2027 when you get your Form 1099-R and then amend. It’s up to you how best to handle this situation.

    As kiarab noted in her post, the recharacterization is one tax event to report on your tax return. Converting the funds back to your Roth IRA from your Traditional IRA is another reporting event, and further, to the extent the funds in your Traditional IRA produce earnings, those earnings will be taxable if and/or when you decide to effect the conversion. 



Answers

  • kiarab
    kiarab FreeTaxUSA Agent Posts: 234 image
    edited March 17

    Hello Dough,

    You will need to amend your tax returns to report the recharacterization. You do not need to wait until you get your 1099-R to report it. You can do it now if you have all the necessary information to report the recharacterization or you can wait until you get your 1099-R next year.

    We do have a great guide on how to report the recharacterization in our software (it includes reporting a backdoor Roth, but you can ignore that part and just focus on the recharacterization if you are not planning on converting your contributions to a Roth IRA).

    https://community.freetaxusa.com/kb/articles/174-backdoor-roth-plus-a-recharacterization-recharacterization-happens-after-december-31st-2024-and-later

  • Dough
    Dough Member Posts: 3 Newcomer

    Thanks kiarab! That is really helpful. In this case, I actually withdrew the funds as well as the earnings via Schwab (they helped me calculate the earnings that will be taxed).

    Besides mentioning that I made the excess contribution and the amount, is there anything else to do until next year's taxes?

  • Dough
    Dough Member Posts: 3 Newcomer

    Thank you both for your comments, I would consider this answered!

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