Had to withdraw Roth contribution, then do a backdoor

harwemar
harwemar Member Posts: 1 Newcomer
edited April 3 in Filing my taxes

Hi all - thanks in advance for the help.

I messed up my Roth this year and am not sure how to report it on my return for 2024.

Situation:

  • Feb 18 2025: Deposited $3.5K into my Roth
  • Feb 20 2025: Realized I was above MAGI this year and removed the excess
  • Feb 21 2025: Deposited $7K as non-deductible traditional IRA contribution
  • Feb 25 2025: Performed $7K Roth recharacterization

I have been following this article on how to report this (https://community.freetaxusa.com/kb/articles/174-backdoor-roth-plus-a-recharacterization-recharacterization-happens-after-december-31st-2024-and-later), which has been very helpful, but my form keeps saying that I still have excess contributions and I'm taking a small tax hit.

Is that ok / to be expected? I assume I will have to amend my 2024 return once I get a 1099-R and also make some changes to my 2025 return, but I just want to make sure that these forms are ok. Thank you again!

Edit: Solved :) I am a newbie and didn't know the difference between a recharacterization and a conversion.

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Answers

  • RyanZ
    RyanZ FreeTaxUSA Agent Posts: 78

    Thank you for letting us know that our article "Backdoor Roth Plus a Recharacterization – Recharacterization Happens After December 31st (2024 and later)" was helpful!

    When you remove the excess distributions from the Roth IRA account, it is common for there to be earnings on the funds while in the account, which will be includable on your 2024 income tax return. FreeTaxUSA doesn't support reporting the earnings on the tax return until you receive the form 1099-R showing the withdrawal, which won't be until next year in early 2026. Since the earnings are not reported on the original 2024 tax return, there shouldn't be a tax hit with regards to this.

    With regards to the Feb 25 2025 $7K Roth "recharacterization," I presume that you mean "conversion" which is common with a Backdoor Roth (which is "converting" funds from the traditional IRA account to the Roth IRA account).

    You are correct that you will need to amend the 2024 tax return when you receive the forms 1099-R to include the earnings, but generally this will not affect the 2025 tax return

    Here is a link to a FAQ on the IRS.GOV website: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras

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