I'm a Betterment customer, and made an accidental excess contribution to my Roth IRA with them. I withdrew the excess, plus earnings. As a result I got a 1099-R from Betterment.
On Betterment's form, they both specify the taxable amount, and tick the box for "taxable amount not determined." The taxable amount they specify is the same as the gross distribution. Here's the full form:
Box 1 Gross Distribution $1234.56
Box 2a Taxable Amount $1234.56
Box 2b Taxable Amount Not Determined Yes
Box 2b Total Distribution No
Box 4 Federal Income Tax Withheld $0.00
Box 7 Distribution Code(s) JP
Box 7 IRA/SEP/SIMPLE No
Box 14 State Tax Withheld $0.00
Box 17 Local Tax Withheld $0.00
(For privacy, I changed the amount in boxes 1 and 2a, but my form also has a value in the low thousands.)
It does seem like this form violates IRS instructions, which say for box 2a, "for the distribution of excess Roth IRA contributions, report the gross distribution in box 1 and only the earnings in box 2a." They further say, "if you are unable to reasonably obtain the data needed to compute the taxable amount, leave this box blank," which Betterment didn't do.
Betterment's 1099-Rs have been discussed on these forums previously, and I know from those posts (especially this one and this one) that one option is for me to file a Form 4852, and assert that Betterment's form is incorrect.
My question is, is there a way to file Betterment's 1099-R as issued, and tell TurboTax the taxable amount somewhere else? I do know the taxable amount, because I took screenshots at the time of the withdrawal, where it was calculated on the spot. I also confirmed this amount with their support group. TurboTax has a little help text bubble saying that if you tick the "taxable amount not determined" box, "We'll help make sure the correct amount of your distribution is taxable," yet I didn't see any prompts or questions along these lines. Instead, I can tell from fidgeting with the form that TurboTax seems to be using the amount in box 2a as the taxable amount, even with "taxable amount not determined" checked.
The problem with using Form 4852 is the hoops you have to jump through: Request a corrected 1099-R from the custodian (already done in my case), contact the IRS to report you couldn't get one, and then paper file your return. It would be nice if I could e-file.
