1099-R Issue TurboTax 2020

[ScalleyMonk]

I have 4 different 1099-R's. 

Codes

1. H

2. B

3. G

4. 7

When I put a date (it does not matter if the date is more or less than 5 years) in box 11 for the 1099-R that has code B it doubles the taxable amount calculation for the 1099-R Code H.  How can I fix this? 

[NCperson]

i think the issue is simpler than you state, but i do think there is an issue/

I dummied a tax return with a number of 1099-Rs already loaded.  I used '7' - normal distribution code.

but when i added an additional 1009R with a code H assuming $10,000 of gross distribution and zero for taxable, line 4c on form 1040 correctly added $10,000 but line 4d added $19,001 - since this is a rollover, there should be no taxable impact.  TT never asked me the question, 'what did you do with the money'.

I replicated the issue with just the code H -

I did separately change the H to a B and I got the question, what did i do with the money.  it never asked me for a date; TT didn't charge tax on this distribution, which is correct (other than it didn't ask about the 5 year rule)

so it looks like the issue is with Code H. 

suggest calling TT on Monday - maybe the moderator will see this??????

[ScalleyMonk]

Correction it is the 1099-R with code G that the taxable amount was doubled.  

Code H 1099-R are not taxable.

Also if I remove date from Box 11 on the 1099-R with the code B the 1099-R with code G is taxed correctly

[NCperson]

well, it may occur with the Code G also as I did not test that, but I was able to create the issue with just adding in one 1099-R with a code H; the rest of my test 1099-R's had a code 7 (normal distribution)

[dmertz]

As far as I know, box 11 is informational only and this entry is not used by TurboTax in any way.

To figure out what is happening, I think it would be necessary to know the details of boxes 1 through 11 of each of the four Forms 1099-R and what you did with each of the distributions.  It would also be necessary to know if you are under age 59½ (I suspect not since you have a code 7 Form 1099-R), between age 59½ and 70½, or over age 70½.

Are you entering actual Forms 1099-R or are you guessing at what they will be and have not yet received them?  Unless you are extremely familiar with these forms, guessing at their details is subject to error and may produce odd results if the details are not correct.

Since this is a public forum, you might choose not to provide the exact dollar amounts from the forms but the dollar amounts that you provide must be representative of the actual amounts on the forms.  For example, you might want to divide all of the dollar amounts that you post here by some constant value like 5 or 10 (without posting the divisor that you use so that nobody can reverse the calculations and determine the actual amounts). 

[NCperson]

while I stated "box 11" above; I really used box 7 for the code; I did not populate box 11 

@dmertz - I was able to replicate the error simply by filling in Box 1 ($10,000), 2a ($0)  and 7 (H)

[dmertz]

2015 or 2016 TurboTax had a problem dealing with a combination of code B Form 1099-R and other Forms 1099-R, particularly those with code G, but that was resolved back then.  Perhaps a similar problem has surfaced.  However, I've been unable to reproduce the problem with 2019 TurboTax; any code H Form 1099-R I enter has the box 1 amount included on Form 1040 line 4c but excluded from line 4d.  It might have something to do with the order of entry of these Forms 1099-R.

I can make TurboTax misbehave if I enter a nonzero (erroneous) taxable amount in box 2a of the code H Form 1099-R, but it causes TurboTax to erroneously reduce the taxable amount of the other distribution (messing up line 32a of the Form 1099-R Summary).

[NCperson]

try creating 3 1099-Rs with a code 7 then create the 4th one with a code H - what happens? 

[dmertz]

OK, I've reproduced the problem and it does seem to depend on the order of these forms in TurboTax.  If the code H Form 1099-R is the first one entered I don't see the problem.  This is definitely reminiscent of the problem that occurred back in 2015/2016 TurboTax.

As a workaround I suggest deleting all of the Forms 1099-R, entering the code H form first, then entering the others.

[dmertz]

It appears that this bug is not present in the final update of 2018 TurboTax (R48) but was present in the first release of 2019 TurboTax (R4) and is still present in the current release (R12).

[dmertz]

I've reported this bug to the moderators.

[ScalleyMonk]

To clarify I incorrectly stated there was a issue with the 1099-R coded H.  The issue is with entry in the 1099-R coded B and the resulting change of tax-ability of the 1099-R coded G (I think)

I entered the 1099-R in this order H, B, G, 7. I will try different orders of entry

[ScalleyMonk]

Thanks for your response

Box 11 is to report  "First year of designated Roth contributions".  When manually entering a 1099-R  in TT you are instructed as follows "Boxes 1-11 Type in the amounts in boxes 1-17, exactly as they appear on your 1099-R.". 

 The IRS has a 5 year rule that governs how withdraws are treated from designated Roth accounts. So the "first year" is very important to how an amount is taxed.  Maybe the IRS treats BOX 11 as informational and uses other amounts or codes on the 1099-R to determine the taxable amount.

 The real issue here assuming this isn’t corrected later by answering other questions in TT is that putting a year (any year) in BOX 11 in a 1099-R that is coded B will change the your taxes owed in TT. In my specific case it looks like by entering the year 2013 (OR any year as I tested other years i.e. 2000 and 2018) as reported by 1099-R with code B it looks like it doubled the taxable amount of the 1099-R with code G. The 1099-R with code G was 100% taxable but now looks like it is 200% taxable. To prove the 1099-R with codes B and G were the culprits’ I deleted them each individually and together and taxes appeared correct in every other instance.

Between 59 1/2 and 70.  All 1099-R's are issued in pdf form from the financial institution and entered manually in TT exactly as reported. They are not available for import yet. I answered all the questions and finished 1099-R entry section.

Here is summary of 1099-R’s per TT with fictitious numbers

I left out state info

1099-R's are the only info entered in TT

1099-R reported in this order H, G, B, 7

With a year reported in Box 11 on 1099-R code

Gross                       

22 $40,869                            

25 $40,869

25(a) $22,166

25(b) $10,000

Taxable

26 $37,903

26(a) $10,000

26(c) $12,166

31(a) $10,000

32(a) $37,903

32(c) $0

32(D) 37,903

Tax Withholding 

37 $8,177

NonTaxable Distribution for sales Tax deduction

NonTaxable pension distributions

40 $0

41 $0

Federal taxes due

$5,644

Without a year reported in Box 11 on 1099-R code

Gross                       

22 $40,869                            

25 $40,869

25(a) $22,166

25(b) $10,000

Taxable

26 $27,903

26(a) $10,000

26(c) $12,166

31(a) $10,000

32(a) $27,903

32(c) $0

32(D) 37,903

Tax Withholding 

37 $8,177

NonTaxable Distribution for sales Tax deduction

NonTaxable pension distributions

40 $0

41 $800

Federal taxes due

$6,844

As you can see by entering a date in BOX 11 in the 1099-R coded B the total taxable amount increases by $10,000 (coincidentally that is the amount reported on 1099-R coded G) and also the nontaxable pension distribution (Amount reported on the 1099-R code B) decreases for $800 to $0

[dmertz]

OK, that was enough information for me to be able to reproduce your results exactly, except that I think that you mistakenly typed $37,903 instead of $27,903 for line 32(d) of your results when box 11 of the code B Form 1099-R is blank.   I get the same result only when the code H Form 1099-R is the first one entered and the year entered in box 11 of the code B Form 1099-R is some year before 2015, say 2010, indicating completion of the 5-year holding period.

The only thing that TurboTax should possibly be doing with the box 11 entry on a code B (or code H) Form 1099-R is use it to determine how much of the distribution becomes Roth IRA contribution basis if the distribution is rolled over to a Roth IRA.  In the case where the box 7 codes and box 11 year indicate that the code B distribution is a qualified distribution, the box 1 amount becomes Roth IRA contribution basis.  If the box 7 codes and box 11 year indicate that the code B distribution is not a qualified distribution, only the box 5 amount becomes Roth IRA contribution basis.  However, TurboTax is making a mess of this function as well.

I suggest leaving box 11 of the code B From 1099-R blank.

I'll add this information to the details that I've passed to the moderators here.

[ScalleyMonk]

You are correct 37(d) without date was a typo on my part. I did a cut and paste of the "with date" info and didn't change that amount in 37(d).

I neglected to mention only the 1099-R 's coded H and B have a date in Box 11. 

Also all the 1099-R's apply to a traditional and/or Roth 401K except the one coded H which is a 401k Roth rollover to a Roth IRA and both have satisfied 5 year rule.

The 5 year rule applies to distributions from a designated Roth 401k or Roth IRA. If you have not satisfied the 5 year rule then a distribution would be subject to taxes only on the earnings portion of your withdrawal and possibly a 10% penalty if other conditions are not met.

I think your financial institution would determine what part of distribution would be taxable and would report it on your 1099-R. Maybe the the year in Box 11 is used by TT for the 10% penalty?  I don't know. But TT must be using the year for something (unintentionally or not) as it is changing your the amount of you taxes and causing a glitch.

You are correct you could leave off the year in TT and if I am not mistaken only 1099-R-s that show federal income tax withheld need to be attached the your return.

I am not sure what you mean by you "get the same results only". Are you saying you can get the correct results by entering the 1099-R's in a certain order and entering the box 11 date correctly?

I tried entering 1099-R's in different order and still get the same results.