2010 IRA Conversion
Hello,
In April 2010 I converted approximately $50K of my wife’s TIRA to a Roth. In October of 2010 I recognized the extent of this future tax bill and recharacterized all of it from her Roth back to her TIRA account. In filing my 2010 federal taxes there was obviously no change in my earned income… there was no net distribution from the TIRA to show on her 8606.
Fast-forward to April 2012…. I received an “Examination by Mail” letter from the IRS on my 2010 return. The IRS saw the 1099-R from the TIRA to Roth conversion and assessed a bill of $18000 (with penalty) but they apparently did not see records to recognize my converting her money back to the TIRA.
How should I handle my “mail in response” to the IRS? What should I submit for them to recognize I executed a “do over” from the Roth Conversion back to a TIRA and well inside the 2010 tax year?
Permalink Submitted by mk foss on Sat, 2012-04-07 23:10
The recharacterization was to be noted on the 2010 return if you recharacterized before the due date and filed with an extension. I think the instructions for the 2010 Form 8606 explained what you were supposed to do. You should submit the information that was supposed to be included on your 2010 return to IRS and also show the monthly or quarterly statement showing the funds being deposited back into your wife’s traditional IRA.
Good luck.