Inherited IRA RMD

[juleyh]

HELP!

I took the correct amount of RMD and imported my 1099-R. It correctly lists "4" (Death), yet I am being charged a penalty of $1,885 for a withdrawal of $1,598????

How can I figure out what Turbo Tax has done wrong. I have had this IRA since 2004 and never before have I had an issue with being charged a PENALTY for taking the REQUIRED RMD, calculated by Vanguard, not by ME.

This is obviously a mistake but I can't see where I could have made the mistake, so how do I figure out what TTax did wrong?

[VolvoGirl]

Try deleting the 1099R and enter it again MANUALLY.  That usually clears something out and fixes it.  @dmertz   

[juleyh]

Thanks. I did what you suggested but the problem seems to be there. For Totals Summary it showed Adjustment to Income -$1885, but absolutely no difference in the amount of tax I owed for Federal or State. On the State (CA) Adjustments Schedule there is still $1,885 as Penalty for early withdrawal of "savings" (?) I assumed it was RMD but it didn't change.

Is there something I need to do to trigger an update? Like close it and re-open software? Is there any other "withdrawal of savings" could refer to?  I haven't withdrawn anything other than RMD that could possibly be subject to penalty, and it correctly shows that I withdrew ONLY the amount of RMD, no more no less.

[rjs]

If you are referring to line 18 in Section C of the CA Adjustments Schedule, "Penalty on early withdrawal of savings," that has nothing to do with your RMD or your 1099-R. It comes from line 18 of Schedule 1 in your federal tax return, which in turn comes from box 2 of a 1099-INT that you entered. The adjustment reduces your federal and California taxable income. It is not a tax penalty. It's a penalty that you paid to the bank that issued the 1099-INT.

(That seems like a rather high penalty. Check and make sure that you entered your 1099-INT forms correctly.)

[juleyh]

Oh you're right! I closed some CDs before Maturity when Rates increased substantially bc I was able to make up the penalties by earning higher interest. That has to be what it is. Now I know where to go so I can check the figures, but the penalties were steep bc I had to forfeit 6 months of interest. This was a couple of years ago, when Rates had a dramatic increase, I'm just catching up to finalizing 2022 so I can file 2023 before the October Extension Deadline date.

Thanks!