Can't e-file due to error regarding Substitute 1099R

[jedi_nj]

The program presents an error preventing submitting the return electronically related to 1099R/4852 substitute forms. It references line 10b, 2018 Federal carryover worksheet not having an amount. In forms it  says that is for Coverdell ESAs. How do I correct this?

[macuser_22]

Why do you think you need a substitute 1099-R?   What are you trying to do?

What are you entering?

[jedi_nj]

Could not get a 1099R with correct information in taxable amount.  

[macuser_22]

What is the 1099-R for?

What code is in box 7?

What is in box 2a?

Why is the taxable amount incorrect?

If you think the 1099-R you received is wrong have you talked to the issuer?

[jedi_nj]

The 1099R is for  a distribution.   Code is 7- regular distribution, 2a is 0.00 on the substitute form.  The contribution was after tax money, many years ago. 

[macuser_22]

If box 2a is zero then it is not taxable.  Why do you need a substitute 1099-R.  The taxable amount on the 1040 form line 4b or 4d should be ze

However, the error that you get would appear to have noting to do with a 1099-R at all.

If you had a 2018 excess ESA contribution on your 2018 tax return and it carried to 2019 then  that is not related to a 1099-R.

[macuser_22 · Accepted solution]

If this was a Traditional IRA distribution (the IRA/SEP/SIMPLE box checked) then  box 2a is REQUIRED by law to be the same as box 1.

You account for prior after-tax contriEnter a 1099-R here:

Federal Taxes,
Wages & Income
(I'll choose what I work on - if that screen comes up)
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version left side) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2019.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14. butions in the interview.

[jedi_nj]

 I believe it is a program error, but was not sure.  Everything else looks correct. When the error check is run, the substitute 1099R shows a red box on the 0.00. I have never contributed to an ESA. Unless that field is used to store other information, I believe this is an error.

[macuser_22]

Delete the 1099-R.  

With the 1099-R deleted do you still get the error in error check - if not then is is not due to the 1099-R?

Changing box 2a to zero will guarantee an IRS audit letter if the IRA box is checked. 

[jedi_nj]

I have done all of these things in exhaustive iterations.  Thank you for the information. I will research the taxability further with IRS.

[jedi_nj]

The first time I ran it, the 1099R was like it was supplied to me, and no errors - but not untaxed.  That means I am paying tax again on the money I already paid tax on. The distribution was equal to all of the after tax amount I contributed.  Since the burden of proof for taxability is on the taxpayer, I thought the program should be able to handle it. But it appears not to be the case for this situation. I thank you again for your feedback.  I will further research the laws regarding the taxability of after tax contributions being distributed in one lump sum and how to present them in a return.

[macuser_22]

Again you do not change box 2a to account for prior after-tax distributions.  That is asked for in the 1099-R interview.    If a Traditional IRA then prior year after tax distributions were required to be reported on a 8606 form for each year that there was such a contribution.  The IRS can access a $50 penalty for each year that a 8606 was require to be filed by was not.    The IRS will often waive the penalty if the missed 8606 form are filed late with a explanation.

If not a IRA then the interview asks for other methods of calculating the taxable amount.