My wife's 1099-R shows a gross distribution of $85,575. This adds to our income. It never asks if this amount was rolled over into another traditional IRA (which it was). Box 2a shows a Taxable amount of "$0.00". Does this mean it knows that amount was rolled over?
No. A rollover is not a contribution.
Delete the 1099-R you entered and re-enter.
When you will get the screen that asks what you did with the money say it was "moved" and all rolled over.
That will put the 1099-R box 1 amount on the 1040 form line 4a with the word ROLLOVER next to it.
Generally, there are no tax implications if you complete a direct rollover and the assets go directly from your employer-sponsored plan into a Rollover or Traditional IRA via a trustee-to-trustee transfer.
Revisit the 1099-R interview in TurboTax and double check that you did not roll it over to a Roth IRA.
Note-
However, there is a IRA one-rollover-per-year rule which you should be aware of.
You can transfer a rollover IRA to another traditional IRA but you can't do it immediately. Federal IRA rules say that once you roll over assets from account A to account B, you cannot transfer the money from account B for another 12 months.
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