Hi,
In Jan 2020, I took a RMD from an inherited IRA in the amount of $700. Under the terms of the CARES Act, which waived RMDs and allowed them to be redeposited, I return the funds to my IRA on 8/31/2020.
Today, I received a 1099-R for the IRA distribution, which listed the full amount as taxable (with the "Taxable amount not determined" checked). I entered it into TurboTax and indicated that the full amount was rolled over into a retirement account. However, TurboTax is still listing this as taxable income. Even if I change the taxable amount (box 2a) to $0, it still shows $700 of taxable income.
How do I get TurboTax to correctly classify this as non-taxable?
After you enter the 1099R say it was not an RMD and then that you rolled it over (even if back into the same account). Was any withholding taken out? If it was then did you replace the withholding with your own money? Otherwise the withholding will be a taxable distribution itself.
How to get info that came on 5498 which was a redeposit of earlier withdrawal back into tax income adjusted so that it is deducted from earlier 1099 forms that were sent to IRA
You don't enter the 5498. After you enter the 1099R you say you rolled it over even if you put it back into the same account. Was it for RMD? I posted the answer above.
Where are you able to indicate that the money was returned? After answering some questions about the 1099-R, the system cycles back to the Income section. There's no opportunity to indicate that the distribution was put back (or rolled-over).
Since there is no RMD required for 2020, after you enter the 1099R say it was NOT an RMD and then that you rolled it over (even if back into the same account). Was any withholding taken out? If it was then did you replace the withholding with your own money? Otherwise the withholding will be a taxable distribution itself. You will get credit for the withholding taken out.
If you already entered the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and renter the 1099-R form.
I went back and indicated that it was NOT an RMD (changing the previous answer), and it again, just cycled back to the Income section. I then deleted that 1099-R and re-entered it, but that didn't work, either.
Withholdings were taken out (Fed/State), and I put EVERYTHING back with my own money. I can't seem to do anything to indicate that it was a rollover-type of deposit. Even in the credits/deductions section, I tried a couple tricks to make it a Traditional/Rollover contribution, but then I got an error saying that I'd OVERCONTRIBUTED to my IRAs, since I'd already met the $6,000 cap with my regular Roth contribution. So frustrating...
Well you probably know not to enter it under Deductions as a new contribution. So forget about that and delete it from there. I'll page someone who knows more, @dmertz
To fully erase the previous answer you made to the RMD question you must delete the Form 1099-R, then reenter it and indicate that none of it was RMD. Simple editing the Form 1099-R and changing your answer is not sufficient.
And VolvoGirl is correct. Nothing about this distribution and rollover is to be entered anywhere under Deductions & Credits.
So I followed the instructions to delete the 1099-R and re-enter it, indicating that it was NOT an RMD. Still, my refund amounts went down, and there was no option after entering it to indicate that the money was rolled-over/returned. It's almost worth not filing and going to Leavenworth than to have to go around and around over this one item! *sigh*
If this was a distribution from an inherited IRA, try indicating that it is not an inherited IRA, making the rollover entries, then editing and changing your answer back to saying that it was an inherited IRA.
You are a GENIUS! That trick worked! My refund just went up significantly! Thank you for your help!
I called Turbo Tax on this question, and they replied that there contributions page had not been changed to reflect the redeposit of a MRD under terms of the CARES Act. They said it would be covered by an update on February 18. I sure hope so.
Your suggestion worked for me as well. My taxable income adjusted correctly thus lowering my tax. Thank you.
I still plan to hold off filing to see if additional forms are needed to address this issue.
I tried calling TT again today and after a half hour or so, their rep gave up and said they were still working on it. I don't have much hope. I think the best thing to do at this point is to print the return, deduct the MRD redeposit from the amount shown on the 1099-R, attach the 5498, write in rollover on line 4b, and mail it in. I guess I will have to do the same thing with the state return.
Lets start over from the beginning. You should delete the 1099R you are working on and re-add it. After you have logged in and are in your return in TurboTax Online:
At the financial services screens, click "Change how I enter my form" then "Type it myself"
Please follow these steps to enter your 1099-R and RMD rollover:
RMDs were waived for 2020. You must indicate to TurboTax that none of the distribution was RMD. If you already enter the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and re-enter the 1099-R form.
You can verify your entry by looking at your Form 1040 line 4 or 5:
What is the solution to posting RMD funds that were returned?
Just enter the 1099R you got exactly as shown.
Since there is no RMD required for 2020, after you enter the 1099R say it was NOT an RMD and then that you rolled it over (even if back into the same account). Was any withholding taken out? If it was then did you replace the withholding with your own money? Otherwise the withholding will be a taxable distribution itself. You will still get credit for the withholding taken out on 1040 line 25b.
If you already entered the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and renter the 1099-R form.