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Can anyone help me with the mechanics of a traditional IRA conversion to a ROTH IRA and the subsequent recharacterization - both in year 2002? Where do I report the conversion and where and how do I report the recharacterization so that the two distributions "wash" each other out so that there are no tax consequences? I received two 1099R's, one with a "7" in box 7 and the other with "N" in box 7.

Download the instructions for Form 8606 from the IRS site. The key here is your explanation of what happened, which you attach to your return. You prepare the 8606 as if the recharacterized transactions never happened. TaxWise should take care of the 1040 entries if you just enter the 1099-R information into the 1099-R forms portion of the program.

Phil Marti
VITA Volunteer
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