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In 2015, contributed $3600 into a Roth IRA. However when we…

In 2015, contributed $3600 into...
In 2015, contributed $3600 into a Roth IRA. However when we file the 2015 tax return, we decided to re-Characterize that to a traditional ira.We received a 1099 r in 2016 with the code of R for recharachterization. The IRS is billing us $1000 for 2015 saying that we cannot deduct $3600 IRA.I was told by the trustee that in order to fix this I need to file for an 8606 for 2015. I keep looking over the instructions and cannot see how that has anything to do with recharacterization and if it does I don’t know how to fill out that form to show that. Can you guide me?
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Answered in 8 minutes by:
11/13/2017
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,112
Experience: Taxes, Immigration, Labor Relations
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According to instructions...

The trustee of the first IRA must report the recharacterization as a distribution on Form 1099-R and the contribution to the first IRA and its character on Form 5498.

See here

https://www.irs.gov/pub/irs-irbs/irb00-25.pdf

Please verify if form 5498 was issued - you may contact the trustee or get your tax account transcript.

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Customer reply replied 8 months ago
I haven't seen a Form 5498 only the 1099R but I can look further. Are you saying that if both of the forms were filed by the trustees, then there would be no IRS notice? More importantly, are you agreeing with me that form 8606 is not applicable in this situation?

That is correct - form 8606 is not needed to report re-characterization.

I posted above IRS direction regarding reporting.

Most likely absence of form 5498 is the issue.

You may call the IRS - use the phone on the notice and verify that.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,112
Experience: Taxes, Immigration, Labor Relations
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