Do I need to Paper File if I Recharacterize?

[nico08]

If I recharacterize a Roth IRA to a traditional IRA, do I have to paper file my federal and state tax returns?

I ask this because IRS Instructions for Form 8606 says that I need to attach a statement to my 1040 and explain the circumstances of the transfer. I assume that TurboTax or Credit Karma tax program would not be set up.to include the required additional recharacterization statement?

So if I have to include an additional statement, then I cant efile through Turbo Tax or Credit Karma, correct?

Lastly, on what lines of the 1040 do you place the math addressing the recharacterization? In my case 14,000 was transferred from my 401k to a Vanguard Traditional IRA and then the Traditional IRA was converted to a Vanguard Roth IRA. This all took place in 2016. I want to recharacterize 13,000 of the Vanguard Roth IRA back to the Vanguard Traditional IRA. Now if I want to show the math on the 1040, do I put 14,000 on line 16a as a pension/annuity distribution, and put 0 in 16b as the taxable amount of that distribution? And do I put 14,000 in line 15a as the distribution from the Traditional IRA to the Roth IRA? And I put 1,000 in line 15b because since I an recharacterizing 13000 of the 14000 of the Roth IRA distribution, only 1000 remains in the Roth IRA and that is the taxable amount?

I have not recharacterized before, so that is why I am asking. Thank you.

 

[jazz4cash]

I just completed my taxes using the HR Block software. It asks you if you have recharacterized any IRA funds and if you check yes there is a text box to enter an explanation.

 

[bingybear]

I have not recharacterized Roth conversions, but have had to file copies of 83b elections. TaxAct had a place where I could "attach" an electronic copy to file with my efile. So I'd bet most programs can handle the more common roth recharacterization

 

[nico08]

I am trying to switch from TurboTax (that I have paid for at a reduced rate through T Rowe Price) to Credit Karma's free tax filing program to file my 2016 taxes. I am not sure if Credit Karma includes a feature where I can attach a note. Maybe it is better for me to stick with TurboTax again for 2016 until I understand how this recharacterization should appear on my 1040?

 

[cathy63]

TurboTax definitely gives you a place to enter the statement. We had to do this in 2014, and I can see the text I entered on a page titled "Additional Information from your 2014 Return". It's in a box labeled "Form 1040 Line 15a explanation statement".

 

[kaneohe]

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Lastly, on what lines of the 1040 do you place the math addressing the recharacterization? In my case 14,000 was transferred from my 401k to a Vanguard Traditional IRA and then the Traditional IRA was converted to a Vanguard Roth IRA. This all took place in 2016. I want to recharacterize 13,000 of the Vanguard Roth IRA back to the Vanguard Traditional IRA. Now if I want to show the math on the 1040, do I put 14,000 on line 16a as a pension/annuity distribution, and put 0 in 16b as the taxable amount of that distribution? And do I put 14,000 in line 15a as the distribution from the Traditional IRA to the Roth IRA? And I put 1,000 in line 15b because since I an recharacterizing 13000 of the 14000 of the Roth IRA distribution, only 1000 remains in the Roth IRA and that is the taxable amount?

I have not recharacterized before, so that is why I am asking. Thank you.

I believe you have the basic idea here. However note that you also need to file F8606 Pt II to cover the Roth conversion (assumes you don't have basis in your
IRAs). The instructions for F8606 and the 1040 (lines 16-18 and lines 15-16 respectively) will give you more details. You need to add the note "rollover" on line 16 of the 1040 and you need to add the explanatory note for line 15 to explain the Roth conversion and subsequent recharacterization.
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
https://www.irs.gov/pub/irs-pdf/i8606.pdf
https://www.irs.gov/pub/irs-pdf/f8606.pdf