I rolled a previous employers 401k into an IRA in January 2018 but took an early $500 distribution($400 net). Do I need to claim it on 2017 taxes?

[patrykgsdad]

Im sorry u misunderstood me. I rolled over 2200 and took a 500 distribution(netting 400). So Im thoroughly confused now. Do I need to enter this 2018 1099R?

[dmertz]

You don't enter the 2018 Form 1099-R itself into 2017 TurboTax , but for the purpose of the Retirement Savings Contributions Credit, if you are eligible for the credit, you must indicate that you made a distribution from a retirement plan after 2014 and before the due date of your tax return, then enter in the box for 2018 Roth IRA, traditional IRA and Qualified Plan Distributions the $500 distributed but not rolled over.

[patrykgsdad]

Thank you for the thorough follow ups to my questions. I needed that. So now to go back and assess the damage this $500 has done. I needed it at the time but would have rather taken a personal loan than the beating I'm taking on that. i bet after all is said and done I'm lucky to have netted 200 out of it. and i have to pay for it next year again. That is almost as bad as a payday loan! That'll be all unless you have a magic trick to offset it. All I can think of is throwing cash in my IRA to counter it.

[dmertz]

Because this distribution can affect the Retirement Savings Contributions Credit for 2017, 2018, 2019 and 2020, there is no way to directly offset the effect.  To counter the effect you would have to contribute an extra $500 to retirement (assuming that you are eligible) in each of those years for a total of $2,000 beyond what you would otherwise contribute.

[patrykgsdad]

I am still within the 60 days of distribution. about 8 days left. Even if I replace the money per say in whole or in part it will carry over? Or for instance if I paid $300 of it back the remaining 200 would have that effect through 2020?

[dmertz]

I didn't realize that you are still within the 60 days of the distribution.  Yes, you can roll over the $500 by using money from any (non-retirement) source to complete the rollover of the entire amount of entire distribution.  Then you won't have to enter the $500 in the Retirement Saving Contributions Credit section this year or any other year.  Make sure the receiving IRA custodian records it as a rollover contribution, not a regular contribution.  And yes, if you roll over only $300, the other $200 will still affect your Retirement Savings Contributions credit through 2020.