Erroneous Roth IRA Conversion Solution: The erroneous Roth IRA conversion problem doesn't require an update. If you are affected, follow the appropriate steps below to correct this problem. I filed my return: Step 1 -- Recharacterize Your Roth Conversion If you haven't done so already, you must "undo" (recharacterize) the erroneous conversion no later than October 15, 1999. Consult the issuer or trustee of your Roth IRA for details on how to recharacterize the conversion. Step 2 -- Enter the Recharacterized Amount in TaxCut In TaxCut, open the tax return you filed. If you don't have a printed copy of your return, print a copy now by choosing Print from the File menu. You'll need information from this return to prepare your amended return.  On the File menu, choose Save As to save the return with a new name. This new file will be your amended tax return. Be sure to make the changes in the following steps to this new file. Click the Navigator button on the Prepare tab, scroll down the list and double-click IRA Distribution (under Retirement and Annuity Income). Note: If you also made a contribution for 1998 to your traditional IRA, go to the IRA Contribution interview instead to enter information about your recharacterization, and skip steps 5 and 6 below. Click the Yes button to begin the interview topic, and answer the questions as they apply to your tax situation. Note: Be sure to answer No to the question titled "Convert All Your IRAs" and Yes to the question titled "Recharacterizations." On the screen titled "Recharacterized Conversions," enter the amount you recharacterized. This amount should be the same as the amount you converted, without any adjustment for earnings or losses. Step 3 -- Complete Form 1040X, Amended Return Note: You have three years from April 15, 1999, to file an amended return reporting the recharacterization. On the Prepare tab, click the Forms button and display the Forms list. Double-click Form 1040X, Amended Individual Income Tax Return (near the bottom of the list). If Form 1040X doesn't appear in the list, uncheck the "Show Only Forms with Data" option at the top of the list. In Column A, lines 1 - 15, enter the amounts from your original return. Complete lines 17, 19, and 24, if applicable. Scroll down to page 2, Part II and enter the following explanation: "Line 1. Recharacterized Roth IRA conversion." On the File menu, click Save. Step 4 -- Print and File the Amended Return Click the Help button at the bottom of Form 1040X, and then click the IRS Instructions tab. Click the link "Where to File" in the left column of Help Central. Write down the address of the IRS filing center for your area. Print Forms 1040X and 8606. On the File menu, click Print. In the Print dialog, click Selected Forms, and then click My Forms. Check the boxes next to Forms 1040X and 8606, and then click the Print button. List the following items on a separate sheet of paper: name and social security number the original conversion amount the total amount transferred back into the traditional IRA (original conversion amount plus any earnings or minus any losses) any earnings or losses on the original amount any basis restored Attach this statement to Form 8606. Sign Form 1040X, and mail both forms and the statement to the IRS filing center for your area. I haven't filed my return: Step 1 -- Recharacterize Your Roth Conversion You must "undo" (recharacterize) the erroneous conversion no later than the due date including extensions. Consult the issuer or trustee of your Roth IRA for details on how to recharacterize the conversion. Step 2 -- Enter the Recharacterized Amount in TaxCut Open your tax return in TaxCut. Click the Navigator button on the Prepare tab, scroll down the list and double-click IRA Distribution (under Retirement and Annuity Income). Note: If you also made a contribution for 1998 to your traditional IRA, go to the IRA Contribution interview instead to enter information about your recharacterization, and skip steps 3 and 4 below. Click the Yes button to begin the interview topic, and answer the questions as they apply to your tax situation. Note: Be sure to answer No to the question titled "Convert All Your IRAs" and Yes to the question titled "Recharacterizations." On the screen titled "Recharacterized Conversions," enter the amount you recharacterized. This amount should be the same as the amount you converted, without any adjustment for earnings or losses. Return to list of Federal Calculation Alerts