Total 2019 Re-Do

[McMahonDT]

I recently completed my mother-in-law's 2020 return and found that she owed significantly more than in previous years. I was concerned that I had entered very much the same information last year for her 2019 return and was concerned about the significant difference. Hence, I re-loaded my 2019 TurboTax Deluxe software and re-did her taxes for last year identical to what I had previously done a year ago.

However, instead of receiving a refund as was the original submission in 2019, the re-do now reflects a significant payment due using exactly the same information I entered last year. As I reviewed the originally submitted 2019 1040-SR with the 1040-SR generated when I re-did her return on my 2019 software, I noted the main (SIGNIFICANT) difference to be items 4c and 4d. Here's the difference with nothing new or different added or deleted:

Item No.    Original Amount Submitted      Re-Calculate Amount

      4c                       $52,537                                     $ 0

      4d                       $  7,537                                     $ 52,537

There is no way I could have made that large error using the same data and same software for both efforts today and one year ago. Were there 2019 TurboTax Deluxe software updates subsequent to submitting her return by mail that could have caused this variance? My mother-in-law is the widow of a retired military officer, and she and her husband had always used, and, in fact, worked for, H&R Block prior to his death in 2018. This variance will cause undue hardship for her. HELP!!

Don McMahon

[email address removed]

[phone number removed]

[VolvoGirl]

Did your redo 2019 by doing a NEW tax return or did you just change the one you had?  You must have answered a follow up question wrong and got a smaller taxable amount.  Maybe this year you answered wrong and got too much taxable?  Better check the prior years too and see what was reported for the taxable amount.

The reason line 4c is now zero is because line 4d is the full amount.  If they are the same then 4c isn't listed.  If you still have the original 2019 file you can save it with another name (so you don't mess up the original) and look at your entries and open the 1099R form and check all the items and compare it to the redone 2019 form to see why you got a low taxable amount.  Same for 2020, switch to FORMS and look around.

@dmertz 

[dmertz]

It's doubtful that the difference has anything to do with a software update.

There's a good chance that the lower taxable amount was the result of using the Simplified Method to calculate the taxable amount of periodic pension distributions.  Use of the Simplified Method requires that the pension was partially paid for with after-tax investment in the plan.  Pension payments are then a mix of this after-tax basis and taxable amounts  with the basis paid out at a rate based on life expectancy.

Generally a payer will calculate the taxable amount and include it in box 2a.  However, if the payer does not know the correct taxable amount, they'll leave box 2a blank and mark box 2b taxable amount not determined.  one would only use the Simplified Method in TurboTax if the taxable amount in box 2a was either wrong or not provided.  Getting a correct taxable amount using the Simplified Method in TurboTax requires providing specific details that are easy to get wrong.  Also, many people make the mistake of thinking that since TurboTax offers to calculate the taxable amount of periodic payments that they should even though a proper taxable amount has been provided in box 2a.

A taxable amount of far less than the gross amount seems to suggest that the Simplified Method was used improperly to do the calculation.  If the gross amount came from a single Form 1099-R, this is likely what happened.

It would be helpful to compare to the 2018 tax return.  On that tax return the corresponding lines would be Form 1040 lines 4a and 4b, but that form combines IRA and pensions onto a single pair of lines instead of using separate lines for IRAs and pensions.  To compare to 2019 tax return you would have to add line 4a to 4c and line 4b to 4d of the 2019 Form 1040.

Does the Form 1099-R have a blank box 2a and box 2b Taxable amount not determined marked?

[McMahonDT]

Please delete my above-referenced inquiry, since there's information on you website that is being observed by uninvited individuals due to being posted on that website.

Also, after doing a lot of forensic research yesterday, I've been able to discover that major that I made before submitting that return. Hence, while you responses and recommendations are very much appreciated, I've resolved the issue. "I have met the enemy, and I'm it!"

Thanks so much!