It depends on how you answer the follow up questions in the interview. Since this is an inherited IRA:
- Is the distribution code in Box 7 a code 4?
- After you enter the 1099R, there is a series of follow up questions inquiring about the nature of the inherited IRA.
- There will be questions about whether or not if the decedent was your spouse or someone else. It also asks for the date of death and the decedent's first name.
- Then it will ask if the decedent had non-deductible contributions. The answer to this will determine the taxable amount of this distribution. If you are not aware of any non-deductible contributions, then you will say that the decedent did not have non-deductible contributions.
- Next question will ask if the decedent was born before xx/xx/1949 or after xx/xx/1949. This is important because if he/she was born before, then an RMD distribution must be made.
- After all the questions have been answered and the entry is finished, Turbo Tax will determine the taxability of the income. More than likely, it will be fully taxable unless there were non-deductible contributions that were made prior to the decedent's death.
- if all the conditions I have mentioned have been met above, if Turbo Tax keeps displaying this error message, assume the entire amount is taxable and put the same amount for Box 1 and Box 2A.
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