IRA Worksheet Inherited Roth (Non-Spouse)

[PK2K]

I have 2 Roth IRA's, one that's mine & one inherited from a non-spouse relative which requires RMD's.  For 2020, Turbo Tax (desktop/Deluxe) is deducting the inherited RMD (IRA worksheet line 8  sourced from line 38/1099-R with Box 7 showing code T, plus check boxes for Inherited, etc.)  from my personal Roth (line 6). It didn't do this in previous years.  I've gone as far as opening the 2019 Turbo Tax program & it looks like everything has been entered consistently. I see section VI, but that seems to be specific for Roth inherited from Spouse - i.e. 'Received from former Spouse due to divorce or inheritance.' While I do see where I can potentially use the 'Roth IRA Basis and Status Smart Worksheet' and retroactively combine both Roth accounts, I'm curious as to what has changed to make this now necessary vs previous years?

[dmertz]

Please edit your question to clarify what lines are being referred to on what forms.  The worksheet titled "IRA Worksheet" in the forms list refers to TurboTax's IRA Deduction Worksheet which has nothing to do with Roth IRAs.  so I don't know what line 8 you are referring to.  Similarly, TurboTax's 1099-R Form has no line 38.  There is a line 38 on TurboTax's 1099-R Summary, but that just shows the total of any state tax withholding on Forms 1099-R, not anything that seems relevant to you question.

[Edit]  I think you are referring to line 8 and section VI of the IRA Information Worksheet.  I'll take look at your details with that in mind.

[dmertz · Accepted solution]

Yes, this is a new-for-2020 bug in TurboTax.  Perhaps @macuser_22 can report it to the moderators.  TurboTax is inappropriately subtracting from the individual's own Roth IRA contribution basis the amount of a distribution from an inherited Roth IRA.

Good job noticing this.  Most people are not that observant.

[PK2K]

Yes, it's the 'IRA Information Worksheet (Keep for your records)' rather than an official tax form. Thanks for checking 🙂

[dmertz]

It seems that TurboTax is entirely ignoring the indication that the distribution has been identified as being fro an inherited Roth IRA.  Step-by-step mode is inappropriately sending the questioning into the section on Roth IRA basis in addition to inappropriately reducing the individual's own basis.

[PK2K]

Thanks so much for your reply! 🙂 (and it's nice to know that it's a potential bug vs me missing a checkbox or something)

[macuser_22]

I confirmed it and Reported.

[Critter-3]

Much of the program is still not updated or functional and will not be until late in January or as last as March for some forms/states ... check the REVIEW tab to see what is not yet ready to file in your return and the estimated dates it will be ready... dates are subject to change.  

[dmertz]

This bug is present in the initial release of 2020 TurboTax.

[macuser_22]

Yea, and this is pretty basis stuff.  No new law or IRS change has modified this area at all.  I see no reason that it should have been touched at all since it worked fine in the past.  This is not even a form that is required by the IRS or gets sent to the IRS, it merely tracks your Roth basis which by law must be kept separate from inherited IRA's from non-spouses.