Federal return rejected "potential issue with calculation of your taxable inherited IRA" message as rejection comme t

[magicmurali]

  Did anyone else got into to same issue and got rejected?.  Not sure why it is stating "inherited IRA" when my 1099-R is showing code 2 (early distribution).  Also any help to get this fixed?  Thanks

[ndpayne]

Yes - I got the same message. On opening my rejected return and pressing the 'fixit' button, TurboTax said they were working on a fix which would be ready by March 5.

I did not have an inherited IRA - just a normal one and all the fields on the 1099-R were filled correctly. Looks like a major mistake and we won't be the only ones with this error.

[TeamT]

Well, there seem to be at least four of us now who filed and got rejected yesterday.  I got a reply this morning saying: "It appears that TurboTax is REJECTING certain returns out of caution while they investigate various BUGs in TurboTax.  A really bad year for TurboTax."  It appears that we got thrown in with the people with actual inherited IRAs who have an actual TurboTax problem.  I really don't want to wait to March 5--assuming they fix it by then.  And I hope I don't have to pay for the state filing again!

[stuartboren]

There are multiple threads regarding this same rejection issue.  Lots of people got hit, seemingly all as a result of the Feb 26 updates.  My wife and I have Traditional IRAs.  For years, we have taken partially taxable distributions and each have Form 8606 but have never had a problem.  Specifically, our situation...

1. Yes Traditional IRAs

2. Yes  Partially taxable distributions (non-zero basis) with 1099-R Box 7 Distribution code = 7.

3. Yes Form 8606s

1. No Inherited IRAs

2. No Roth, no Roth conversions

3. No IRA contributions

4. No Form 2210

We filed on Feb 26 with IRA and state (CA).  Got rejected from Fed but CA is still "Pending".

[TeamT]

@stuartboren Yes, all of us got lumped in with the actual inherited IRA people who hit a glitch with Form 8606.  We needed 8606 for Roth conversions.  After getting rejected on Friday, I went about 5 times back through step-by-step to make sure I'd checked the box for 'no' on inherited IRA, and then double checked with the forms.  Since nothing was actually wrong, and I'd 'fixed' the 'problem', I decided on Saturday to try submitting them again.  Well, they weren't rejected in the first half hour like the first ones, but both fed and state are pending.  So maybe that's hopeful??  If they don't get accepted by tomorrow, maybe they are holding them until TurboTax is done fixing their problem?

It sure would be nice if TT had just sent a nice email to everyone affected and explained what's going on, rather than shouting REJECTED and making us feel like we did something wrong when we didn't....  Or give us a little discount on our $20 state efile fee, for selling us damaged goods?

[stuartboren]

My Fed got rejected on Feb 26, but State (CA) is still "Pending" after almost 72 hours.  I have not retried anything yet. 

I wonder if that State "Pending" status was generated by TT?  or was it from the State (via TT)?  I hope TT is waiting for the IRS return to be "accepted" before they  (TT) transmits my State return.  I fear that if TT transmits my State return with a "corrupted" Fed return, it will be difficult to untangle.  The State (CA) requires that a valid Fed return accompanies the State return.  I presume that's the case with all states with an income tax.

[TeamT]

@stuartboren My state rejection said it was because the federal was not accepted, so you probably don't need to worry about your state one going through.  Besides that, it doesn't sound like you have the actual problem.  Apparently, inherited IRA distributions with a basis should not be reported on the same 8606 the people were using for a traditional distribution, but TT was putting it on there.  So, since you don't have an inherited IRA and don't have that proble, I don't think there is actually anything wrong with your federal return anyway.  Good luck!

[Jinny2]

I had the same thing happen.  I went back and checked and I definitely checked "no" to the question about inherited IRA on both my husband's and my IRA's.  What is going on?  Is there a bug in the program?

[Spikey609]

I got the same erroneous error, my IRA was not inherited.

[Johnzambrano]

I have the same problem-referring to my "inherited" IRA. My IRA was not inherited and I clearly noted so when doing the step-by-step. I guess we wait for March 5. I hope Turbo Tax reads these comments

[FayeP]

Yes, exact same situation.  Filed Feb. 26 and received rejection message: Federal return rejected "potential issue with calculation of your taxable inherited IRA" .   No inherited IRA

[taxman12]

I got this same rejection message on 3/1/21. When I opened the TT file, it said it had already been fixed. I didn't have to press the fixit prompt. Then I filed again. Now pending status for 24 hrs. I would like to know what the problem was and what was fixed? I did not have an inherited IRA.

[cf1213]

I have encountered the same issue with the "inherited IRA" conversion e-file rejection by the IRS. I did perform an IRA-to-ROTH taxable conversion. But I do not have an inherited IRA. I reviewed and confirmed that all of the printed forms and worksheets had no spurious entries in any of the fields relating to inheritance. I checked the 1040, IRA worksheet, and forms 8606 to see if anything was entered in the inheritance fields - no info was in the inheritance fields. In another thread on this site, a TT expert advised that if someone mistakenly enters "yes" to the "was this inherited question" and then backs out later (before trying to efile), a phantom 1099-R may be created and carried through. They also indicated that you could delete the phantom form before re-filing. For me, there was no such phantom 1099-R in my forms list. The only way this could be happening to this many folks, where we cannot see any issue in our forms or printouts, is if the EDI data for the return being sent to the IRS is changing the 1099-R distribution code, or if data is being placed in one of the inheritance fields. I hope we get an answer on the bug-fix for this soon.

[Spikey609]

This is all a problem with TurboTax software, it should be resolved when they do an update on March 5, they informed me.

[StanM]

I had same problem. E-file rejected by Fed. Issue with "taxable inherited IRA".  I had no inherited IRA..  I went back and reviewed what I had submitted for retirement income (pension and IRA).  Was surprised to see that what I selected to input was not what was submitted. Example: On pension, "is this an RMD?"  I selected  "no", what was submitted "yes".  On IRA, " is this Inherited?" I selected "no", Submitted was "yes".  I attempted to correct this by editing, and putting in the correct answers, but they reverted to the incorrect ones. I think we need a TurboTax update, hopefully by March 5th.