How to Correct a 1099-R Entry?

Forum|Forum|5 years ago
July 5, 2020
1 reply
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Along with many other users, I have been baffled that TTax keeps failing to track the basis of a Tradition IRA from year to year. After reading the thread https://ttlc.intuit.com/community/retirement/discussion/form-8606-non-deductible-ira-tracking/00/775924, I understand that the problem arises from the wording of one of the interview questions that has led many to answer it “No” incorrectly. TTax asks for each 1099-R whether “you made any nondeductible traditional IRA contributions” to the account. At least some of us with basis tracking problems assumed this question refers events in the tax year being reported. (Others might not recognize that “nondeductible” contributions are contributions of funds already taxed.) This question should have been phrased “Have you EVER made (OR ROLLED OVER) nondeductible (AFTER-TAX) contributions to this IRA.” Do others agree that this is the meaning of the question currently asked by TTax?

However, now while in the “Your 1099-R Entries” page when I try to edit the information for my Traditional IRA that has a basis, the nondeductible contributions question is no longer among those asked. I also tried adding a new 1099-R with that IRAs information but a slightly different title (expecting to then delete the older version), but the contributions question wasn’t asked.

How can I correct the answer to the question that TTax no longer is asking, either in the dialog or forms mode of the program? I am using the Deluxe version for 2019 on a CD purchased from Costco.

Best answer by macuser_22

@DFH wrote:

All of the withdrawal went to QCDs, and the total withdrawn exceeded the RMD from that IRA. Could that have anything to do with the fact that the question about nondeductible contributions isn't asked?

Incidentally, isn't it true that if I had satisfied the total of all the RMDs required (based on their 12/31/18 balances and my age) with withdrawals from other IRAs which contain no bases, the IRS imputes a fraction of that total is return of nondeductible contributions not to be taxed? If so, then correctly answering the nondeductible contributions question for each IRA would not produce the correct result, namely that the basis of an IRA from which there was no withdrawal is decreased.

That's the answer. A QCD can ONLY come from before-tax money in the IRA and does not effect any basis - so the question will not be asked if the entire distribution was a QCD.

A QCD is excluded from taxable IRA income, since any after-tax basis in a IRA is not taxable, a QCD cannot be excluded from it so a QCD distribution does not reduce or affect any basis in the IRA.

And no, the IRS does not impute anything. For tax purposed you only have ONE Traditional IRA that is the aggregate total of all existing IRA accounts. The yearly 2019 RMD based on the total value of all IRA accounts as of December 31, 2018 can be taken from any one or several IRA accounts.

macuser_22

Alumni - Champ

The question asks "if you made and kept track of any nondeductible contribution to your traditional IRA from 2018 or prior years"

"Any" seems rather clear but the "nondeductible contributions" is a link to an explanation.

And the IRA owner should certainty be aware if they did so because they are required to file a 8606 form as part of their tax return for each non-deductible contribution in the year that the contributions was made - that is how it is tracked - on a 8606 form.

That question should be asked if you are entering a 1099-R that has the IRA/SEP/SIMPLE box checked.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2019.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14.

NOTE: If there is an * next to line 15 then 6-15 will be blank and the calculations will be on the "Taxable IRA Distributions worksheet instead.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

DFHAuthor

Level 4

@macuser_22, thanks for your reply. I tried editing the existing 1099-R from exactly the location in TTax that you specify. However, I didn't get asked the question about nondeductible contributions under discussion (though I remember seeing it before when entering 1099-R data).

All of the withdrawal went to QCDs, and the total withdrawn exceeded the RMD from that IRA. Could that have anything to do with the fact that the question about nondeductible contributions isn't asked?

As I wrote initially, I also tried creating another version of the 1099-R for the IRA with basis from the same location of the TTax interview, and still I didn't get the question.

Incidentally, isn't it true that if I had satisfied the total of all the RMDs required (based on their 12/31/18 balances and my age) with withdrawals from other IRAs which contain no bases, the IRS imputes a fraction of that total is return of nondeductible contributions not to be taxed? If so, then correctly answering the nondeductible contributions question for each IRA would not produce the correct result, namely that the basis of an IRA from which there was no withdrawal is nonetheless decreased.

macuser_22

Answer

Alumni - Champ

@DFH wrote:

All of the withdrawal went to QCDs, and the total withdrawn exceeded the RMD from that IRA. Could that have anything to do with the fact that the question about nondeductible contributions isn't asked?

Incidentally, isn't it true that if I had satisfied the total of all the RMDs required (based on their 12/31/18 balances and my age) with withdrawals from other IRAs which contain no bases, the IRS imputes a fraction of that total is return of nondeductible contributions not to be taxed? If so, then correctly answering the nondeductible contributions question for each IRA would not produce the correct result, namely that the basis of an IRA from which there was no withdrawal is decreased.

That's the answer. A QCD can ONLY come from before-tax money in the IRA and does not effect any basis - so the question will not be asked if the entire distribution was a QCD.

A QCD is excluded from taxable IRA income, since any after-tax basis in a IRA is not taxable, a QCD cannot be excluded from it so a QCD distribution does not reduce or affect any basis in the IRA.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**