Retirement tax questions

It's your choice. And it seems you do misunderstand your options.

1. You can report the 1099-R on your 2025 tax return by using a substitute form (Form 4852). TurboTax will ask you if you need to create one when you enter your 1099-R; OR
2. You can wait and report it all on your 2026 tax return which may create a higher tax liability and penalty.

You must take the required minimum distribution (RMD) as soon as possible and then file form 5329 and a letter of penalty forgiveness with TurboTax Online or TurboTax Desktop. You will need to file a 5329 form and request a waiver of the penalty which is already part of your tax return. (The waiver would only be denied if there is no reasonable explanation and the missed RMD was not taken at all.) 

Steps to include the RMD that should have been taken in 2025 (if you choose).  Thanks in part to our tax expert @ReneV4.

1. Go to your Form 1099-R information in the Wages & Income section
2. Continue through adding the form and answering the questions, be sure to use Code 8 in box 7 
   1. You reach a screen 'Do any of these situations apply to you?' Select 'I need to file a substitute 1099-R' until you reach, 'Let's go over any required minimum distributions (RMD)'
3. Select Yes for, 'Let's check if you missed any required distributions'
4. Continue, then enter the total RMD that was due by December 31, 2025 when you reach, 'Tell us the total RMD for your other IRA accounts'
5. Select Yes when you reach, 'Did you take a corrective distribution for your IRA?', then Continue
6. Select Yes when you're asked, 'Do you want to request a waiver to reduce the penalty?', then Continue
7. Enter the RMD amount that you are requesting a waiver on (amount of your missed payment), then Continue
8. Write your explanation in the next section, then Continue
9. You will then reach, 'Nice job finishing your waiver', Continue

Note: After the first RMD, all subsequent years' RMDs are due by December 31 of each year. Keep a paper trail for your tax files and Form 5329 will be generated with your tax return to include your explanation and waiver request.

@angela829