1040 discrepancy between line 5a and 5b

[VolvoGirl]

We better page @dmertz   All IRA goes on line 4 not 5 and the 3 years to spread out the tax are only for IRA.  So you must have got it on 5he wrong line.

[dabfvnc1]

This is not an IRA, it is a 401(k). Different item. Please review the guidance for 8915-F:

https://www.irs.gov/instructions/i8915f#:~:text=As%20a%20result%20of%20section,Disaster%20Distributi...

[fanfare]

@VolvoGirl 

You can take your disaster distribution from either your IRA or your 401k

I merely forgot that line 5 is not an IRA. so no basis calculation..

[dabfvnc1]

Correct - the three year plan does apply to all based on the guidance, but in this case, it appeared as different amounts (correctly) between lines 5a and 5b on my 1040. Apparently the reviewer at the IRS that said we owed the difference didn't review the submitted 8915 and casualty forms which confirmed these values

[dmertz]

The income from disaster distributions from both IRAs and pensions can be spread over 3 years.  [Edit: I guess you sorted that out while I was typing my reply.]

I'm not sure I see a problem with the amounts on lines 5a and 5b.  If what was reported on 2021 Form 1040 line 5b was the amount on line 5a plus the 1/3 of the 2020 disaster distribution from pension minus 2/3 of the 2021 disaster distributions from pensions, that seems correct.  That should all be reflected on the 2021 Form 8915-F Part II.  (Pensions in this context includes all non-IRA qualified retirement plans.)

Given the amount on line 5a, you apparently have other non-IRA retirement distributions that were not  claimed to be disaster distributions.

[dabfvnc1]

In this case I didn't - both came out of 401(k) accounts, one for myself in 2020 and one from my wife in 2021 for the same disaster, but the total of the two did not exceed $100,000. Everything was correctly stated on the 8915-F, so I'm not sure why the IRS would see this as a lack of payment. They're stating I owe all of the taxable amount in 2021, even though their own guidance in 8915-E says it can be spread over three years. We used Turbotax for both 2020 and 2021, which is how it knew to include the 2020 amounts (imported from previous year).

[fanfare]

"line 5b was the amount on line 5a plus the 1/3 of the 2020 disaster distribution from pension minus 2/3 of the 2021 disaster distributions from pensions, that seems correct."

@dmertz 

OK, but this is the first mention of a distribution from 2020 spread out. Are you guessing or did I miss it?

In any case, IRS is not accepting the 5b amount.

@dabfvnc1 

I suggest you print your 8915 worksheets and submit them (again?) to the IRS with Form 8915.

The worksheets are a required attachment.

[dmertz]

"We had a similar withdrawal addressed on our 2020 taxes for a smaller amount to address initial damage and repairs due to the hurricane, and made a second withdrawal in 2021."

I think the IRS examiner simply screwed up.

[dabfvnc1]

No, we discovered this when reviewing the returns. I didn't take a "taxpayer" withdrawal shown in the worksheet in 2021, so we went back to 2020 and confirmed the amounts. After reviewing the payment calculations, that's where we figured out why the math was off. And yes, the IRS was not accepting 5b. Their specific statement in the CP2000 stated we didn't say whether the fund was part of a pension or annuity, but the 1099-R clearly stated it. We also did not select any other option that would indicate it was anything but a 401(k) retirement account. 

I'm still waiting to hear back from a TT accountant to confirm, I'm 99% sure they didn't review these forms when sending the CP2000. Good idea on including all of the 8915's, we'll add these and 4684 forms with the reply letter from both 2020 and 2021.

[fanfare]

"one for myself in 2020 and one from my wife in 2021 for the same disaster, but the total of the two did not exceed $100,000."

If the total of the two did not exceed $100,000, then neither of the distributions exceeded $100,000

But you said: "Here's the numbers - 5A is 190023, "

Your 2021 Line 5a should be less than $100,000, not $190,023 which is greater than $100,000.

@dabfvnc1 

[dabfvnc1]

The $100,000 limit applies to total amount of withdrawals that can be taken against a named storm or disaster from any retirement plan where the taxable amount is spread over three years. Again - read the guidance for both.

[Ahitch]

What is the three year option mentioned in an answer regarding the difference in line 5a and 5b. My 2023 return was reduced by 1/3 but I don’t recall taking any three year option.  

[DaveF1006]

The three year plan that is being discussed in this thread was for tax years 2020-2022. This has no effect on 2023 tax return so this is probably the reason why you don't remember it. Your 2023 return may have been reduced but it wasn't for this reason or shouldn't be for this reason.

@Ahitch