How does TT enter a reversal of RMD withdrawal for 2020?

[m67j66]

Took full RMD in January.  In August returned 90% by rollover back into the account as allowed by law for 2020.  Brokerage however reported taking the full RMD to the IRS. Going through section in TT seems to provide no way to reduce my tax liability.

[Bsch4477]

If you started reporting your 1099-R delete the form and start again. Now when it asks if the distribution is RMD say NO. Then you will be prompted to input the amount you returned. 

[m67j66]

That leaves me with a question.  Let us say the original withdrawal was for $50,000 and $9,000 was taken out at the time for taxes.  Then when the law was changed, $45,000 was returned to the IRA.  That would leave $9,000 in taxes  plus $5,000 personal withdrawal that was taken out for a total of $14,000 as a withdrawal.  Will TT ask the right question to account for the total withdrawal and correct amount for taxes?  Is the $5,000 or $14,000 counted as an "RMD"?  Or just a withdrawal?

[SamS1]

$14,000 will be the taxable portion if you took a $59,000 distribution and returned $45,000.  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.   Please follow these steps to enter your 1099-R and RMD rollover:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R” and enter your 1099-R
4. Continue until "How much was a RMD?" and select "none" Continue
5. "Tell us if you moved the money through a rollover or conversion" and select "I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)" Continue
6. Indicate "No, I rolled over less then $59,000" then enter $45,000 as the amount actually rolled.
7. Continue to the summary screen.

You can verify your entry by looking at your Form 1040 line 4 or 5:

1. Click on "Tax Tools" in the left menu
2. Click "Tools"
3. Click "View Tax Summary" in the Tool Center window
4. Click on "Preview my 1040" on the left

[Philly12]

First, enter everything exactly as reported on your Vanguard 1099-R form.  After that, TT will explain about the CARES Act and ask if this was a RMD.  Since you did a reversal, TT explains that you should answer "No", it was not a RMD.  Then, TT does a great job of asking a series of questions regarding how much you reversed.  Did you return all of it, including the tax owed?  If so, you owe no taxes, and the amount of tax already withheld will be applied to this year's tax return.  Did you return a portion of it?  If so, how much? In your exemplar, $50,000 was the taxable amount -$9,000, the tax withheld = $41,000 distributed. You returned $41,000, the distributed amount,  plus $4,000 of the $9,000 taxes that were withheld.  You will only owe tax on the $5,000 that you did not return.  The $9,000 in taxes that was withheld has already been sent to the government and will be used to pay the taxes on the $5000 you did not reverse and this year's taxes.  You'll probably get a hefty refund.

[m67j66]

thanks

[m67j66]

Thanks.

[m67j66]

Thanks

[pderas]

I've done all of the above suggestions. Thanks everyone!

I'm still left with a 1099-B (Proceeds from Broker and Barter Exchange Transactions) listing the total of four RMDs I took which were transferred, as usual, from my IRA to my taxable Vanguard account, which holds Vanguard Total Stock Market  Admiral shares.

The total amount transferred for Jan, Feb, Mar & April of 2020 was $3,911.08, which I rolled back June 30 2020.

Cost or other basis is listed as $3,017.49, with a date acquired of 09/17/2013.

Vanguard shows a Wash sale loss disallowed amount of $0.00, and a Gain/Loss of $893.59.

My tax amount has gone from $911 to $171, so the previous changes have worked. But what do I do about this 1099-B?

[Cynthiad66]

Make sure that the tax entries on the return has reported all of the items on the 
Form 1099B.  If not, then you will need to report those items on the return.

[wjsst3]

TT is not taking me to the next questions referred to about how much of the RMD was returned.

[Critter-3]

And RMD cannot be returned so you must indicate it was not an RMD for 2020 since they were not required.  

Deleting the 1099-R form and entering it again may help. 

[macuser_22]

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@wjsst3 wrote:

TT is not taking me to the next questions referred to about how much of the RMD was returned.

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Delete the 1099-R you entered and re-enter.

Answer the RMD question that "None of this distribution was a RMD" or "RMD not required" depending on the TurboTax version - because it was NOT a RMD, there were no 2020 RMD's.

If this is an inherited IRA then answer the "Is this IRA inherited" with NO. The purpose of that question is to PREVENT rolling an inherited IRA over, but is allowed for 2020 only.

Then you will get the screen to say it was "moved" and all rolled over.

Also check the box that this was NOT a COVID related distributions - it was a RMD that was returned.

That will put the 1099-R box 1 amount on the 1040 form line 4a with the word ROLLOVER next to it.