I have a non-spousal inherited Roth IRA from a relative who died in 2020. Everything I see online, and have been told by my financial advisor, indicates that disbursements I take from this account, if done in the 10 years following death, are non-taxable. This year I received a disbursement of $7,000. The 1099-R I received lists that amount in boxes 1 and 2a. 2b is checked as is the IRA/SEP/SIMPLE box. Box 7 code is 4.
When I entered this 1099-R into Turbo Tax, my projected refund dropped by approximately $1,500, and when I look at the income summary, the $7,000 disbursement is being listed as income. Can anyone explain what's going on and provide suggestions on how to get Turbo Tax to not view this as income? I did read in another post that I need to be aware of confusing wording on the question about is the IRA inherited from the payer (financial company is listed as opposed to relative). I initially said no, but have changed to yes, which then allows me to list my relative's name. Both approaches to that question resulted in the same loss in my refund total.
