How should I categorize 1099-R retirement income in Turbotax? The IRS has audited my return for five years because of my 1099-R from Fidelity.

[MichaelL1]

What did you do with the 1099R that IRS did not approve of?  Was taxable amount in box 2?  If not was amount from box 1 reported as income?  Need to know this to help ensure 2018 is correct.

[wahill-vt]

I do not know what I am doing wrong. That is why I'm asking you. I provide 1099-R line amounts in box 1 and two as TurboTax asks. My electronic return lists that income on 1040 line 16a.  For 5 years the IRS has challenged my return by asking for copies of my 1099-R.  This year I'm asking you for advice before I file electronically.  Thanks for any help you can give.

[MichaelL1]

16a is gross amount, 16b is amount taxed, so I can only assume the amount show as taxed was incorrect.

 Is the amount in box 2 (taxable amount) of the 1099R lower than amount in Box 1 (gross amount)?

IRS had to give you an explanation of why they changed something on the return.  Is audit over?

I need more details to help you.

[wahill-vt]

Thanks for your reply. The amount entered in box 1 of the 1099-R was the amount entered on line 16a of the 1040.  The amount in box 2 was the amount entered on line 16b of the 1040.  The box 2 amount is lower than box 1 amount.  The IRS has never changed the TurboTax electronic return. The IRS has never given a reason for requesting my 1099-R copies.  The IRS promptly sends me my refund once I have sent hard copies of my 1099-R.  Again, this has occurred 5 years in a row.

[MichaelL1]

OK great, then IRS is just verifying the 1099R is accurate, and I am guessing they are doing this is there is a large amount of taxes withheld from the 1099R's.  You are most likely getting large refunds (I am assuming) and this is part of the IRS program to make sure the return is correct, and you are who you say you are, so the refund is going to the correct place.

[wahill-vt]

Thanks for your help, Michael.  If this is really what is going on, I'm dismayed they pick on me and not those they really should go after!  Thanks again.   Bill

[MichaelL1 · Accepted solution]

You would report the 1099R's just as you have in the past showing the amounts from each of the boxes checked.

IRS does look at refund returns, as I mentioned in comments and you are just  one of the lucky (or unlucky) ones they chose to look at.

So just input the 1099R and answer the questions that follow.

To enter pension and annuity Payments (1099-R)
•    Click on Federal Taxes
•    Click on Wages and Income
•    Click on I'll choose what I work on (if shown)
•    Scroll down to Retirement Plans and Social Security
•    On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button