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I'm helping my BF do his taxes for the first time and I need some major help!
Last year, he attempted to do a backdoor ROTH (income is too high to contribute directly), but was misinformed by a TD Ameritrade employee that he could directly contribute to a ROTH, so that is what he did.
On 4/11/2016, he contributed $11,000 to a ROTH IRA ($5500 for 2015, $5500 for 2016).
When I found out a few days later (I was very annoyed BTW), I immediately had him call TD Ameritrade to try and reroute the funds to his Traditional. Unfortunately, the funds were already in transit so they were unable to reverse the transaction. His only option was to recharacterize. He did the paperwork immediately, but unfortunately it took several days before the recharacterization took place.
On 4/20/2016, the $11,000 entered his Traditional IRA account.
On 8/2/2016, he actually completed the backdoor ROTH and the $11,000 moved back into the ROTH IRA.
His 2016 Traditional IRA 1099-R:
(1) Gross distribution $11,000 (2a) Taxable amount $11,000 (7) Distribution code 2 (early distribution, exception applies) with IRA box checked.
His 2016 Roth IRA 1099-R:
(1) Gross distribution $5,500 (2a) Taxable amount $0 (7) Distribution code N (recharacterized IRA contribution for 2016 and recharacterized in 2016)
Can someone walk me through how this should be reported on his taxes and form 8606?
So confused.
Last year, he attempted to do a backdoor ROTH (income is too high to contribute directly), but was misinformed by a TD Ameritrade employee that he could directly contribute to a ROTH, so that is what he did.
On 4/11/2016, he contributed $11,000 to a ROTH IRA ($5500 for 2015, $5500 for 2016).
When I found out a few days later (I was very annoyed BTW), I immediately had him call TD Ameritrade to try and reroute the funds to his Traditional. Unfortunately, the funds were already in transit so they were unable to reverse the transaction. His only option was to recharacterize. He did the paperwork immediately, but unfortunately it took several days before the recharacterization took place.
On 4/20/2016, the $11,000 entered his Traditional IRA account.
On 8/2/2016, he actually completed the backdoor ROTH and the $11,000 moved back into the ROTH IRA.
His 2016 Traditional IRA 1099-R:
(1) Gross distribution $11,000 (2a) Taxable amount $11,000 (7) Distribution code 2 (early distribution, exception applies) with IRA box checked.
His 2016 Roth IRA 1099-R:
(1) Gross distribution $5,500 (2a) Taxable amount $0 (7) Distribution code N (recharacterized IRA contribution for 2016 and recharacterized in 2016)
Can someone walk me through how this should be reported on his taxes and form 8606?
So confused.
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