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mgd092907
Level 2

1099-R: The amount of taxes withheld on your 1099-R is more than your taxable retirement income...?

My employer failed the 401k discrimination test and as a result money that was supposed to go to my retirement was sent back to me and taxe withheld.  The audit risk step in Turbotax is flagging a risk that:

 

"The amount of taxes withheld on your 1099-R is more than your taxable retirement income.  If you have an amount in Box 4 (Federal income Tax Withheld) of your 1099-R, generally all or part of your retirement distribution is taxable.  Go to Personal Income, and select the Retirement category.  Verify the amount in Box 2a of your 1099-R is the correct taxable amount."

 

I don't really know how to resolve this or what it means.  I simply entered my 1099-R as the form and boxes are complete on it.  The whole situation confuses me and I don't want it to be a problem.  Any thoughts or suggestions would be appreciated.

1 Best answer

Accepted Solutions
ToddL99
Expert Alumni

1099-R: The amount of taxes withheld on your 1099-R is more than your taxable retirement income...?

If the 1099-R is accurate (taxable income is less than taxes withheld) and the program will allow you to proceed and e-file, then do not  be concerned about a possible audit risk -  just continue and file the return.

 

As the program's instructions state: "Verify the amount in Box 2a of your 1099-R is the correct taxable amount."  You have done that.

 

It is uncommon for tax withheld to be greater than the taxable income reported, hence the "audit risk" flag. It does, however, happen and you just need to proceed and file.

 

Some states, however, will not accept an e-filed return where tax withheld is "too high" (in their judgement). If you encounter this problem, you will have to file your state return by mail.

View solution in original post

2 Replies
ToddL99
Expert Alumni

1099-R: The amount of taxes withheld on your 1099-R is more than your taxable retirement income...?

If the 1099-R is accurate (taxable income is less than taxes withheld) and the program will allow you to proceed and e-file, then do not  be concerned about a possible audit risk -  just continue and file the return.

 

As the program's instructions state: "Verify the amount in Box 2a of your 1099-R is the correct taxable amount."  You have done that.

 

It is uncommon for tax withheld to be greater than the taxable income reported, hence the "audit risk" flag. It does, however, happen and you just need to proceed and file.

 

Some states, however, will not accept an e-filed return where tax withheld is "too high" (in their judgement). If you encounter this problem, you will have to file your state return by mail.

View solution in original post

SweetieJean
Level 15

1099-R: The amount of taxes withheld on your 1099-R is more than your taxable retirement income...?

You may have made a data entry error (such as typing a comma instead of a decimal).   Please check the entire 1099-R carefully.

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