dmertz
Level 15

Get your taxes done using TurboTax

The problem is with the Forms 1099-R, not with TurboTax.  It's generally bad practice for the payer to issue a corrected Form 1099-R for a late-taken missed RMD because the tax code requires that distributions are taxable in the year they are actually paid because it causes the exact problem that you are experiencing.  The result manual adjustment to the 2022 Form 1099-R was not accommodated in the automatically generated 2023 Form 1099-R.  (I've seen this same scenario.  The culprit in that case was Capital One Bank.)

 

What should have happened if the tax code was properly followed is that there should have been no correction to the 2022 Form 1099-R, requiring you to file Form 5329 Part IX requesting a waiver of the penalty for the late-taken RMD.  It would be convenient if the payer would correct the 2023 Form 1099-R to make the corresponding adjustment, but apparently that's not going to happen.

 

To avoid having to paper-file your 2023 tax return by submitting a substitute form the 2023 Form 1099-R and incurring the inevitable delay in processing, I think I would file your 2023 tax return by including the Form 1099-R as received, then amend your 2022 tax return by submitting a substitute Form 1099-R (Form 4852) to replace the corrected 2022 Form 1099-R, changing amounts in boxes 1 and 2a back to what the original 2022 Form 1099-R showed and including Form 5329 Part IX requesting the waiver of the excess-accumulation penalty on the $2,000 late-taken RMD.  That will remove the $2,000 from your 2022 taxable income and should result in a refund of a few hundred dollars.  The explanation for the substitute form would be that the payer mistakenly altered the 2022 Form 1099-R to include a distribution that actually occurred in 2023 and was reported on the 2023 Form 1099-R.  Moving $2,000 from your 2022 taxable income to your 2023 taxable income hopefully will not have much negative effect on your combined tax liability for the two years.