@fanfare Unfortunately, the only way I can get it to back it out is to 'appeal the penalty' on the subsequent pages. If I state the RMD as 0 or the Gross Distribution amount, it still adds on a $190 (25%) penalty. So I reverted to the actual distribution and IRS table numbers for 2025.
The only way I can get it to back the penalty out of the Federal Tax Due is to answer 'Yes' to the 'Do You Want to Request a Waiver to Reduce the Penalty' and explain that the RMD is $660 according to IRS Table II.
I even deleted the IRA from TurboTax and then saved the file and re-entered it and noticed that the problem seems to be that TurboTax is using the reported Gross Distribution as the RMD, since on the page 'How much of your RMD without a corrective distribution as you requesting a waiver?' in the appeal process, it then states 'Tell us how much of the $759 in RMD you want the IRS to waive to reduce your penalty.'
I double checked my IRA entries in TurboTax and I had correctly stated the Gross Distribution as $759 and the RMD as $659, so this appears to be an internal TurboTax Deluxe error whereby it is using the Gross Distribution as the RMD amount and not the actual RMD amount that was entered by the user.
To get it to back out the penalty altogether, you have to look at the RMD amount ($759) stated on this appeal page and then enter that same amount in the 'RMD Amount you want the IRS to waive tax on' box on the page.
It seems like it will need an update from Intuit to correct this problem however I have no plans to pay to upgrade my TurboTax license just so I can tell them that their product isn't working properly. They can figure that out for themselves.
