Audit on Roth recharacterization..

nck4857 · #1 (**permalink**) 08-04-2010, 07:22 AM

So I just got a nice letter from the IRS. In '08, I converted my Rollover IRA from an old 401k to a Roth. The market crashed, so I recharacterized it back to the Roth. The IRS thinks I owe them $2300 on the initial conversion. Going to the tax guy tomorrow.. Any suggestions? I shouldn't owe this, right? I was about 95% sure there is no tax liability if you recharacterize...

jIM_Ohio · #2 (**permalink**) 08-04-2010, 07:43 AM

Quote:

Originally Posted by nck4857

So I just got a nice letter from the IRS. In '08, I converted my Rollover IRA from an old 401k to a Roth. The market crashed, so I recharacterized it back to the Roth. The IRS thinks I owe them $2300 on the initial conversion. Going to the tax guy tomorrow.. Any suggestions? I shouldn't owe this, right? I was about 95% sure there is no tax liability if you recharacterize...

Are you representing yourself on the audit?
I might stop by an HR block office or similar and check with them

nck4857 · #3 (**permalink**) 08-04-2010, 10:22 AM

I'm actually taking it to the tax guys tomorrow that usually do my taxes.. Of course, this audit is from the one time I actually did turbotax by myself. Lesson learned, I guess!!

nck4857 · #4 (**permalink**) 08-07-2010, 12:40 PM

Update: went to the tax guy, he said I had filed everything correctly, but they were seeing a lot of these audits because there really isn't a dedicated place to report a recharacterization on the 1040. We sent all the forms and everything back, he said I should hear back in 6-8 weeks...

yeah, no fun.

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