Back to close this up.
I'm not sure whether I got a second level rep. The first person I spoke with transferred me to "Customer Service," and that person in turn transferred me to someone with "IRAs, Pensions, and Social Security benefits."
Anyway, the IRS agent encouraged me not to file a Form 4852, but rather to input into TurboTax the 1099-R as I wish I'd received it, with earnings specified. To be specific, I would put:
Box 1 Gross Distribution $1234.56
Box 2a Taxable Amount $12.34
Box 2b Taxable Amount Not Determined No
The rationale was that if I weren't filing an amendment, and we were back during the normal time window to file the initial return in 2020, I wouldn't have had the 1099-R from Betterment yet. Although the 1099-R from Betterment does say it will be furnished to the IRS, the IRS also wouldn't have had a copy at the time of filing.
I have always thought it was an inviolable rule of tax returns that you report exactly what you receive from financial institutions, but that apparently is not so. The agent actually said he thought it would be more confusing than helpful to file Form 4852 because it would be arriving in calendar year 2021, correcting a 2020 tax form, and applicable to a 2019 return. He thought the mixture of years might trip up the system and bring pointless scrutiny to my return. Although filing Form 4852 might seem like the logical thing to do, "taxes don't always work logically," he said.
As for complaining about Betterment, that went nowhere. First, he said, they don't pursue issues with "prior year" tax returns. Even if they did though, since Betterment checked the "taxable amount not determined" box, that basically exempts them from having any responsibility over what goes in box 2a. I got the sense they could put "LOL" in box 2a and the IRS wouldn't blink.
The good news out of all this is that taking this approach — filling out the 1099-R as if Betterment had broken out the earnings — means I don't have the complexity of including Form 4852 and paper filing my return. I'm not surprised I didn't figure this out during my initial filing, because I wouldn't have thought to pretend to have received a form I didn't receive. That said, I'm happy with this as a result. I just wish it hadn't taken more hours than dollars that I owe in tax.
