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Can item 4b on the 1040 be more than the amount in 4a? Doesn't seem to make sense that the taxable amount is more than the actual sum of pensions, IRA's, etc.
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June 4, 2019
3:24 PM
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Retirement tax questions
Yes it can be. Not all gross amounts are entered on line 4a.
June 4, 2019
3:24 PM
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Retirement tax questions
@Indianaed Only because TT is doing it wrong. Search for line 4a and check out some of the issues people are having.
June 4, 2019
3:24 PM
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Retirement tax questions
TurboTax is handling the 4a and 4b entries correctly according to the IRS instructions. Here is what the IRS instructions say about entries on line 4a and 4b:
Fully Taxable Pensions and Annuities
Your payments are fully taxable if (a) you didn't contribute to the cost (see Cost, later) of your pension or annuity, or (b) you got your entire cost back tax free before 2018. But see Insurance Premiums for Retired Public Safety Officers, later. If your pension or annuity is fully taxable, enter the total pension or annuity payments (from Form(s) 1099-R, box 1) on line 4b; don’t make an entry on line 4a.
June 4, 2019
3:24 PM
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Retirement tax questions
@Texas Roger @Indianaed And one more time, you can read the instructions that way but are you really suggesting that is what the IRS wants to see on 4a? If your answer is 'yes' then I ask why would they want that?
June 4, 2019
3:24 PM
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Retirement tax questions
The statement seems clear to me and it is copied word for word from the IRS instructions. The bold emphasis is mine. TurboTax must follow IRS instructions to get their software approved. You would have to ask the IRS why they don't want the gross amount entered on line 4a for a withdrawal where the withdrawal is fully taxable.
June 4, 2019
3:24 PM
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Retirement tax questions
@Texas Roger Or I could figure out logically that the instructions aren't really what they want; they want the same thing as in prior years: gross distributions to be reported somewhere on the return. And I wonder how other programs got IRS approval (e.g. Taxslayer and H&R Block) when they are reporting the gross? TT just doesn't want to put in the effort to fix this.
June 4, 2019
3:24 PM