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Level 2
posted Feb 20, 2021 3:23:40 PM

I was the beneficiary of my mother's IRA. Why was that payment not taxable?

My mother had a traditional IRA

0 4 477
4 Replies
Expert Alumni
Feb 20, 2021 3:39:22 PM

First, go over your entries and make sure they are correct. 

 

The IRA could have been a non-deductible IRA will all contributions made with after-tax money or a qualified distribution from a Roth.

 

Please note: A qualified distribution from a Roth IRA is tax-free and penalty-free, provided that the five-year aging requirement has been satisfied and one of the following conditions is met:

  • Over age 59½
  • Death or disability
  • Qualified first-time home purchase

 

 

Level 2
Feb 20, 2021 7:28:22 PM

It was not a Roth IRA, and the contributions were all pre-tax.  But regardless of how I answer TT's question "Did you have nondeductible contributions for this IRA?" the amount does not show up in my taxable income.

 

I also made a non-deductible contribution to my own IRA this year and in past years.  Looking at the form 8606 (Non-Deductible IRAs)  that TT created, it seems to be treating this distribution from my mother's IRA as if it were a distribution from my own IRA.  My IRA distributions would not be taxed, because all contributions were made after-tax.  I did tell TT that this 1099-R was from an IRA I inherited, but it doesn't seem to be separating the two.

Expert Alumni
Feb 22, 2021 5:35:14 PM

The IRA distribution from your mother's pension would be taxable if they were never taxed to her. 

 

I would suggest you delete the form 1099-R entry in TurboTax and re-enter it and make sure you treat the questions in TurboTax literally before you answer them.

Level 15
Feb 22, 2021 5:45:19 PM

this is a known bug in TurboTax 2020 that hasn't been repaired yet.

Try later.