How is a corrected RMD amount reported in the next tax year?

[jeffreysak]

In 2017, my RMD was short $5,500 and I corrected it by instructing the IRA custodian to distribute that amount on 1/22/18.  I filed Form 5329 with my Form 1040 and the IRS waived the penalty.  The issue I now face is that the 1099-R I received for 2018 obviously includes this $5,500 that is associated with the 2017 RMD.  If I include the full amount shown on the 2018 1099-R, then I will be paying tax on an amount I already paid tax on in 2017.  What is the correct way to report this issue?  My thought is that if I reduce the "Taxable Amount" (Box 2b) by the $5,500 it will provide the correct and equitable result, but I'm concerned it will raise red flags if the 1099-R does not match what is reported to the IRS.

[macuser_22]

 "I will be paying tax on an amount I already paid tax on in 2017..."   How did you pay tax in 2017 if you did not take the RMD until 2018?

[jeffreysak]

OK that makes sense.  My thought was that by filing Form 5329 with my 2017 Form 1040 that I was reporting that tax was due on the $5,500 shortfall of the 2017 RMD.  But that's not what happened as Form 5329 is only used to request a waiver of the penalty and did not include the $5,500 in taxable income.  Is my understanding correct?

[rjs]

Yes, that is correct. If line 54 of Form 5329 is zero, nothing was added to your taxable income.

[jeffreysak]

A pretty silly question now that I think about it.  Thanks for setting me straight.

[rjs · Accepted solution]

You did not pay tax on the RMD in 2017. It was not included in your 1099-R for 2017 because you did not take the distribution in 2017. You report the full taxable amount on your 2018 1099-R, and pay the tax on your 2018 tax return. You cannot reduce the taxable amount on your 2018 1099-R.

[rjs]

The 1099-R reports only distributions that were actually taken in the year that the 1099-R is for. It does not include distributions that should have been taken, but were not. Your RMD is not automatically included in your 1099-R just because it's required. It is only included when you actually take the distribution.