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Level 1
April 16, 2020
Question

Erroneous Withdrawl

  • April 16, 2020
  • 2 replies
  • 1 view

My financial advisor accidentally withdrew an extra $2500.00 as part of an RMD from one of my IRA's.  We repaid it, but taxes had already been taken out and reported.  My question is how do we record this on our taxes this so it's not considered taxable income?

    2 replies

    DaveF1006
    Level 15
    April 16, 2020

    The way i would report this by following the menu path listed below:

    1. Go to federal
    2. Income and Expenses
    3. Less common income
    4. Miscellaneous Income, 1099-A, 1099-C
    5. Scroll to the bottom to other reportable income
    6. Scroll through until you reach a screen thqat has a description filed and amount. For description, you may enter something like RMD mistakenly withdrawn but paid back. Then enter the amount as -2500. Make sure there is a negative sign there as this will reduce this from taxable income for the year.   
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    Level 15
    April 16, 2020

    If you mean that the $2,500 was the amount in excess of your RMD, the $2,500 was deposited back into the IRA within 60 days of the distribution and the $2,500 is included in the amount in box 1 of the Form 1099-R, this is a rollover.  After entering the Form 1099-R, indicate the amount that was RMD, indicate that you moved the money to another retirement account (or returned it to the same account), that you did a combination of rolling over, converting and cashing out, then indicate the amount that $2,500 was rolled over.  The entire amount will appear on Form 1040 line 4a but only the taxable amount of the portion not rolled over will appear on line 4b along with the ROLLOVER notation.  Whatever amount was withheld for taxes, shown in box 4 of the Form 1099-R, will be credited on Form 1040 line 17 along with any tax withholding from any other sources and will either increase your refund or decrease your balance due.

     

     Do not enter the $2,500 anywhere as an amount of negative income.