I received a 990-T from my IRA custodian. How do I claim these taxes on my return?

[DoninGA]

A 990-T is a Exempt Organization Business Income Tax Return (and proxy tax under section 6033(e)).  Not supported by TurboTax.

Why would your IRA custodian send you an Exempt Organization Business Income Tax Return? - <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f990t.pdf">https://www.irs.gov/pub/irs-pdf/f990t.pdf</a>

[Critter]

Did the IRA custodian file the return for your IRA and just send you a copy ? Ask them if you don't understand what it is for.

[macuser_22 · Accepted solution]

Bottom line is - you don't file it.  The custodian of your IRA files it.  You probably received a K-1 from from a security that you hold or the IRA custodian did.

If you hold a Limited Partnership or LLC in your IRA then any Unrelated Business Income in excess of $1,000 is taxable (even though it is in an IRA). It is not reported on your tax return but on a 990-T form. (The custodian of your IRA is required to file the form for you but you must submit the K-1 form(s) to them - ask the custodian about this).

Unrelated Business Income is reported as code "V" in box 20 on the K-1 form.

Also see pub 598.
http://www.irs.gov/publications/p598/ch01.html

[JerryForell]

He didn't ask how to file it he asked how to claim it on his return.   Is it claimed on Line 73 "Credits from Form: ...", of the 1040?

[macuser_22]

@JerryForell - A 990-T does not go on a personal tax return on any line anywhere.  It is filed as a separate return on it's own by the IRA custodian as described in the IRS instructions.

(BTW: the 1040 line 73 is for federal tax on fuels and has noting to do with IRA's or the 990-T form).

[frank112]

Hi @macuser_22 

I called my custodian and they said that my Self-Directed IRA LLC has to file the 990T.

They, as the SDIRA as the custodian, will not do it for me.

As SD IRA custodian, they will only file IRS form 5498.

I have the Home and Business edition of TurboTax, can this edition allow me to file the 990T from the info on the K-1, if not what do you suggest?

What information from the K-1 I would need to be given to properly file the 990T?

Thanks in advance!

[macuser_22]

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@frank112 wrote:

Hi @macuser_22 

I called my custodian and they said that my Self-Directed IRA LLC has to file the 990T.

They, as the SDIRA as the custodian, will not do it for me.

As SD IRA custodian, they will only file IRS form 5498.

I have the Home and Business edition of TurboTax, can this edition allow me to file the 990T from the info on the K-1, if not what do you suggest?

What information from the K-1 I would need to be given to properly file the 990T?

Thanks in advance!

---

It would appear that the IRA trustee does not understand the IRS regulations.  The trustee must file, not you.    A SDIRA is still an IRA with more investment options.  In any event, unless there is $1,000 or more reported as code "V" in box 20 on the K-1 form then the 990-T is not required.

Per the 990-T Instructions: https://www.irs.gov/pub/irs-pdf/i990t.pdf

I can't  help with filling out and filing a 990-T since I am not a financial institution that is required to file one.

"Who Must File
Trustees for the following trusts that
have $1,000 or more of unrelated trade or
business gross income:
1. Individual retirement accounts
(IRAs), including traditional IRAs"
4. Roth IRAs described under section
408A,

[dmertz]

The law does not require the IRA custodian to be the one that prepares Form 990-T.  Often, the custodian requires the IRA owner to file prepare this form and then will forward this form to the IRS along with the payment that must be made from the IRA to the IRS.  Even if the IRA owner files the form, the payment must be sent from the IRA to the IRS.  It cannot be a distribution from the IRA that the IRA owner uses to pay the tax, so there will likely have to be some coordination between the IRA owner and the IRA custodian to make sure that the payment to the IRS is handled properly.

TurboTax does not support Form 990-T, so you'll likely have to prepare the form manually; you can download the fillable pdf form from the IRS.  Since the payment from the IRA is not a personal expense, it is not reportable anywhere on your individual tax return.

[frank112]

@dmertz 

In this case the IRA LLC held within the SDIRA account will prepare the 990T, will file it and will pay any applicable UBIT to the IRS, correct?

[dmertz]

That seems reasonable to me, but I have no particular experience with SDIRAs.

[Critter]

Ask and or alert the IRA custodian to the need for a form 990 and have them file it if needed. 

[frank112]

I did and they do not file it.

The IRA LLC has to, which is better for me as I control the process.

[macuser_22]

I am not sure how you would do that because any tax owed MUST come from the IRA itself as an *administrative* fee, NOT as a normal distribution that would generate a 1099-R and ONLY the IRA trustee can remove administrate fees and sent it ti the IRS but the 990-T must accompany the tax.

@dmertz - what do you think?

[frank112]

The IRA LLC has checkbook control with its own bank account and tax id, so it will file the 990T return and pay the tax (like a fee) to the IRS directly.

The custodian only wants to know the total valuation of the IRA account assets ( Stock, bonds, IRA LLC, etc.) each year to report it to the IRS, that is all.