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chinyoung
New Member

If the IRS states that a 1099-R was not reported, but the amount is listed in the tax return, how do you reconcile it with the IRS?

The IRS sent a letter stating that "retirement income taxable" from the form 1099-R was missing from our 2023 tax return; however, we reported the amount shown in the 1099-R and also selected in turbo tax that the entire balance in the traditional IRA was converted to a Roth IRA within the 2023 tax year. Our 2023 tax return also shows this amount. The IRS is trying to tax us on the balance in the 1099-R, but given the conversion to the Roth, we should not owe any taxes. My spouse also reported the same in our tax return, and there were no issues raised for their account.
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3 Replies

If the IRS states that a 1099-R was not reported, but the amount is listed in the tax return, how do you reconcile it with the IRS?

It may have shown up on the wrong line so the IRS missed it.  What line is it on the 1040?  What code is in the 1099R box 7?  An IRA should be on 1040 line 4a and the taxable amount on 4b.    Did you get a taxable amount for it?  A ROTH conversion should be all taxable unless you made any non deductible IRA contributions.  

chinyoung
New Member

If the IRS states that a 1099-R was not reported, but the amount is listed in the tax return, how do you reconcile it with the IRS?

Thanks for the quick response!  I should've added that we don't qualify for the deductions for contributions to an traditional IRA, which is why we did the backdoor Roth.

 

What line is it on the 1040?  Line 4a and 4b (taxable amount shown as "0")

 

What code is in the 1099R box 7? - "2"

 

An IRA should be on 1040 line 4a and the taxable amount on 4b.    Did you get a taxable amount for it?  - The amount listed on 1040 line 4b is "0"

rjs
Level 15
Level 15

If the IRS states that a 1099-R was not reported, but the amount is listed in the tax return, how do you reconcile it with the IRS?

We can't see your tax return, but you must have entered something incorrectly or answered a question incorrectly somewhere along the line. The full amount that you converted should be on Form 1040 line 4b. Line 4b should not be zero.


In your original question you said "given the conversion to the Roth, we should not owe any taxes." That's not true. A conversion from a traditional IRA to a Roth IRA is fully taxable. (The only partial exception would be, as VolvoGirl said, if sometime in the past you made nondeductible contributions to the traditional IRA.)


You also said "Our 2023 tax return also shows this amount." But you have not told us where the amount that you converted appears on your tax return. It should be on line 4b, but you said that line 4b is zero. It's not clear what's on line 4a. If the amount is on line 4a, but line 4b is zero, then, again, you made a mistake in an entry somewhere.


Unless the amount that you converted is somewhere other than line 4a, the IRS is probably correct and you should follow the instructions in the IRS letter to pay the additional tax that you owe.

 

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