I received 1099R 2018 RMD for inherited IRA. TT is asking me about nondeductible contributions in this section. Is that for my inherited IRA? or Traditional IRA?

[MichaelL1]

If you just entered the inherited IRA 1099R then it is referring to the 1099R only.

What section is it asking the question?

[dmertz]

If you are being asked this on the Tell Us a Little Bit More About This Inherited IRA page, TurboTax is asking in regard to the inherited IRA.  If you are being asked this on the Any Nondeductible Contributions to Your IRA page, TurboTax is asking about your own traditional IRAs, not the inherited IRA.

[Wampuskat-8]

I'm in the Wages/Income section. I add my 1099R info for my inherited IRA RMD, which I received in 2018. (I have a traditional IRA but did not take anything from that account). It says if you're done entering my 1099Rs then hit Continue for follow up questions. It asks me if me or my wife have taken 2016 or 2017 hurricane distributions (No), did we repay any 2016 or 2017 distributions (No since we didn't take any),  let's find your IRA cost basis (I have made no contributions to the inherited IRA but I have made non deductible contributions to my traditional IRA), then it asks for the value of my traditional IRA (doesn't ask for inherited IRA value which seems weird to me). It says enter the total value of ALL of my traditional IRA, simple IRA, and SEP. (When I enter the value of my traditional IRA it has a huge impact on my taxes.) So are all these questions tied strictly to my inherited IRA? That last question specifically asks about my traditional IRA (which I have one in addition to the inherited IRA). In another section (Deductions and Credits) it does ask and I do provide specific info to my traditional IRA. So is the Wages and Income section specific only to my Inherited IRA or does it require me to also provide info on my traditional IRA?

[dmertz]

The questions about traditional IRA basis asked after clicking the Continue button on the Your 1099-R Entries page are about your own IRAs and your wife's IRAs, not the inherited IRA.  TurboTax does not track basis in inherited IRAs, so TurboTax only asks about basis in the inherited IRA as part of the entry of the Form 1099-R from the inherited IRA and requires you to personally calculate the taxable amount if the decedent had basis in the decedent's traditional IRAs.  Everything about the inherited IRA must be kept entirely separate from your own IRAs.

After clicking the Continue button on the Your 1099-R Entries page, with the exception of the question asking if you completed all required distributions (RMDs), all of be questions apply either to your own IRAs or your wife's IRAs.  Be sure *not* to include in the year-end values of any inherited IRAs.  The behavior you are seeing upon entering your own year-end value suggests that you have basis in nondeductible traditional IRA contributions and you made a distribution from your own IRAs.  Until you enter the correct year-end value, TurboTax is unable to prepare Form 8606 to correctly determine the taxable amount and will temporarily calculate that more of your traditional IRA distribution is nontaxable than actually is.

For any distributions from the inherited traditional IRA (code 4 in box 7 of the Form 1099-R), be sure to answer Yes when TurboTax asks if this distribution was from an inherited IRA.

[Wampuskat-8]

For my traditional IRA value - I am taking the value from my year end vanguard statement. I do have years where I made non deductible contributions 2017 and older. I have tracked that and reported each year.  I have never taken a distribution from my traditional IRA. Just from my inherited IRA. When I enter the value of my traditional IRA my refund drops by almost $3000. I don't ever recall being asked about the value of my traditional IRA.

[dmertz]

If you have never taken a distribution (or done a Roth conversion) from your IRA, entering the year-end value should have no effect.  If it's having an effect, it implies that you have entered a distribution that you've identified as coming from your own IRAs.  Perhaps when entering the Form 1099-R for the distribution from the inherited IRA you did not answer Yes when asked about it being inherited.

[Wampuskat-8]

I went back multiple times and reviewed. I clearly indicate it is an inherited IRA (as I've done for last 5 years). I have never taken an RMD from my traditional IRA. I have never done a Roth conversion. I have, however, discovered I have never filled out the value of my traditional IRAs (reviewed last 5 years of 8606 form). I never recall TT asking for that though. Not sure if that matters. I don't know what to do now. If I enter the value of my traditional IRA (not my inherited IRA) my refund drops by $3000. Suggestions?

[dmertz]

The only forms that are affected by your year-end balance in your own traditional IRAs are Forms 8606 and 5329.  From what you've indicated, you should have nothing on these forms except perhaps a nondeductible traditional IRA contribution for 2018 on line 1 of Form 8606 which should carry through to line 14.  If your Form 8606 shows anything on line 15, you've entered a distribution that you've indicated has come from your own traditional IRAs.

Check for any entries in Part III of Form 5329.  From what you have indicated, there should be none.

If you are married filing jointly, make sure all Forms 1099-R and related entries have been associated with the correct spouse.

[Wampuskat-8]

Checked 2017 8606 forms for both my wife and I - you are correct on info on Line 1 and 14. Nothing else (nothing on Line 15). I have no Form 5329 but searching my return for it shows I didn't need to have that form based on my IRA contribution activity. Have had  only one wife and received only 1 form 1099R (inherited IRA for me). Crazy, huh? I'm thinking of paying the $90 to TT for a tax adviser to review. Ever use that resource? Worth it? Other than leaving the value of my traditional IRA question blank (like I apparently have done for the last 5 years) I don't know what else to do.

[dmertz]

By "correct spouse" I meant you and your wife since you are each the other's spouse.

The only other thing I can suggest is to compare your entire tax return with and without the year-end value entered, but I can't imagine what would be affected other than Form 8606 or Form 5329.