Ira distribution on 1099-r is not shown on form 1040, line 4a

[iamwhoiam]

@prtaylor56

Yes, I called a few days ago.  Was initially directed to put my email address on the mailing list to get an update regarding lines 4a and 4b.  I had already done that.  The link is buried somewhere in all of the 4a and 4b posts.  Was told that many people had called regrading these lines and also told there would be an update this week.  My software was updated yesterday but there was nothing addressing 4a and 4b.

Found this in a Knowledge Base Article for Intuit Pro Tax:

"For pensions, if the gross amount received from all pensions is not the same as the taxable amount received from all pensions, both the gross and taxable amount will print on Form 1040. If the gross pension and taxable pension amounts are the same, then only the taxable amount will print on Form 1040.  For IRAs, if the gross amount received from all sources is not the same as the taxable amount, both the gross and taxable amount will print on Form 1040.  If the gross IRA and taxable IRA amounts are the same, then only the taxable amount will print on Form 1040 unless a conversion from a traditional to Roth IRA was made."

There are several posts in the professional community forum regarding lines 4a and 4b.

[prtaylor56]

@avian99
Your quote from the Knowledge Base says it all, and I cannot understand why so many TT "experts" in the community can't read past the instruction about line 4a being blank if your single distribution is fully taxable.   They would see the instruction on multiple distributions and on partially taxable distributions.

[prtaylor56]

By the way, if and when you give up hope that TT will ever fix this, there is a work-around that you might consider.  Before explaining that, I want to emphasize that you should never change any 1099-R form itself, especially the IRA/SEP/SIMPLE checkbox.  Doing so may cause a mismatch if and when the IRS computers cross-check your 1099-R's against your return, may change TT's tax calculation, and will definitely interfere with some TT error checking.

If you have entered all your 1099-R's completely and correctly, and 4b is correct, and 4a is not blank but is also less than 4b (this will happen only if you have more than one IRA and/or pension distribution, and partially taxable one(s) are being included on 4a, but fully taxable one(s) are not):

1. Switch to the forms view, and find and open the "1099-R Summary" form in the list.  This is a TT worksheet. not an IRS form, and is not sent with your return.

2. If one or more of your fully taxable IRA distributions are not being included on 4a, got to Line 1 of the 1099-R Summary form labelled "Total gross distributions from box 1 of from 1099-R". Verify that the number there is correct, as the total of all the gross amounts of your IRA distributions.  Now right-click that number and override it with an amount exactly one dollar more.  You may have to also override Line 8 and/or Line 10 back to their original amount, if either changes to equal the new amount on Line 1.  Now look at your 1040 Line 4a. It should now include the correct total of all your gross IRA distributions, plus one dollar.

3. If one or more of your fully taxable pension distributions are not being included on 4a, got to Line 22 of the 1099-R Summary form labelled "Total gross distributions from box 1 of from 1099-R"). Verify that the number there is correct, as the total of all the gross amounts of your pension distributions.  Now right-click that number and override it with an amount exactly one dollar more.  Now look at your 1040 Line 4a. It should now include the correct total of all your gross pension distributions, plus one dollar.

So now Form 1040 Line 4a is correct, except for being either one dollar high if you overrode only the IRA or only the pension totals, or two dollars high if you had to override both (which I hope is a really rare case).

read continuation below, as this comment has reached some text limit.

[prtaylor56]

continued from comment above

You will note that TT does not flag these overrides as an error and will check and calculate everything else as before.  And the IRS has no way of even knowing that you overstated your gross distribution on Line 4a, unless and until their computers cross check with your 1099-R's and even then I'm pretty sure they don't flag differences of a dollar.  And since the taxable amount on 4b is correct, they won't care if the gross amount you reported is a dollar or two higher than what you actually received. They mostly don't like it when you report income that's lower than what you actually received.

No one is suggesting that this is as good as TT fixing this, but it is better than sending in a return with 4a thousands of dollars less than 4b. Plenty of folks have already reported horrible problems with that.

[iamwhoiam]

If I do that it just adds a dollar to the taxable amount of my IRAs and nothing to the gross because it automatically changes lines 8 and 10 in the summary to match line 1 so that it appears that the IRAs are still fully taxable.   Have to then change 8 and 10 back to the original amount and then the gross of all distributions appear although $1 more than what they should be.  Shouldn't have to do any of this and I would prefer not to do this.  Thanks for the info.
Some people are receiving the correct refund amount even with line 4a less than 4b. Still don't know why it goes through correctly for some and not for others.
The TT 1040 is actually working as per the Knowledge base information.  The gross of my pension is on 4a because it is not fully taxable but the gross distribution from my IRAs are not listed because they are fully taxable.   Whether or not this is what the IRS wants who knows.  Again, was never an issue when pensions/annuities and IRAs were separated because it was obvious how much one received from the pension and how much from IRAs and how much was taxable.

[prtaylor56]

@avian99

OK, I corrected the instructions to add the Line 8/10 overrides.  As far as TT working per the Knowledge Base, the problem is that it doesn't recognize that a single IRA and a single pension is now a multiple distribution, since they are combined on a single line.  It's really simple:  Line 4a should be blank if all IRA and all pension distributions are fully taxable, and in all other cases 4a should show the total gross distributions for both IRA'a and pensions.

Put another way, Line 4a (gross) should be either blank or larger than 4b (taxable).  It should never be the same amount or smaller.  That's just elementary sanity, no matter what interpretation you have of the instructions.

[iamwhoiam]

@prtaylor56   Yes, I was on the phone for 40 mins. with TT today (2nd call this week) and re-explained that since line 15a/b and 16a/b have now been combined that 1099Rs should be added together and gross distribution listed on 4a if one or more distributions are partially taxable. There needs to be a change in the coding so that this happens.  I was told that there are concerns but the 4a/4b "stuff" is not considered an issue.  She did send in a report regarding my comments and the request that this be corrected.  

[prtaylor56]

@avian99

Yeah - it will only become an "issue" when an influential TT employee sees this problem on their return.  But since by definition TT employees aren't retired and receiving pensions or IRA distributions, I guess there is no use waiting for that to happen.

[iamwhoiam]

I was hesitant to e-file because of 4a<4b and because IRS agent told me 4a>4b  but I e-filed last Friday and my refund was direct deposited today and it's the correct amount.

[prtaylor56]

@avian99

Glad to hear it.  Different filers reported different outcomes with 4a < 4b.  Just glad it's over for this year (I got my expected refund after filing with 4a "corrected" by my edit).

[iamwhoiam]

@prtaylor56   I'm glad that you also got your refund and that it was correct.  Maybe this will all be cleared up in time for next year's tax season.  

[ottoslick]

In TurboTax 2019 when I enter my two pensions on 1099-R's the pension total doesn't show up on line 4c and 4d on 1040

[DenisC]

If the gross distribution is fully taxable and there are not any exceptions then 1040 line 4a should be blank. See the excerpt pasted from the IRS 2019 instructions:

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf 

A. Except
as provided next, leave line 4a blank and
enter the total distribution (from Form
1099-R, box 1) on line 4b

[mhv]

I wish I would have read your message back in March 2019.  My taxable Ira distribution were entered correctly.  Then on the IRS website it showed my transmittal as 0.00 for total IRA distribution figures for line 4a and line 4b. This caused the IRS to change all my taxable figures including my social security tax.  I ended up getting an refund check from the IRS dated March 2019. I called the IRS the woman on the phone said I was due the refund by the figures that they showed.  Of course I called Turbotax who stated they had no issues.  Then August 2020 I receive another letter from the IRS stating I did not claim the IRA distribution.    I now have to pay interest and the Substantial tax understatement penalty of $1168.00.    I  have always done my taxes with Turbotax online.  If I was told in the beginning how to correct this issue, I wouldn't have had such a mess to deal with now.     

[terrysherri1955]

How is taxable amount of 1099-R figured?