Turbotax 2020 saying I owe taxes on RMD returned per CARE act

[dmertz]

The problem is with TurboTax's misguided wording of the question, not with what TurboTax does with the answer.  Answered appropriately despite TurboTax's misleading guidance, the tax return can be prepared properly.

[richiett7491]

Fix it please

[SamS1]

Please follow these steps to enter your 1099-R and RMD rollover:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R” and enter your 1099-R
4. Continue until "How much was a RMD?" and select "none"
5. Continue "Tell us if you moved the money through a rollover or conversion" and select "I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)"
6. Continue answering the questions.

 RMDs were waived for 2020. You must indicate to TurboTax that none of the distribution was RMD. If you already enter the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and re-enter the 1099-R form. 
  
You can verify your entry by looking at your Form 1040 line 4 or 5:

1. Click on "Tax Tools" in the left menu
2. Click "Tools"
3. Click "View Tax Summary" in the Tool Center window
4. Click on "Preview my 1040" on the left

If you are not seeing the RMD questions, temporarily change your age in My Info to 72 then input the 1099R.  Follow the screens to the RMD questions.  Change your age back when finished.

[poseyak]

2020 RMD recaptured withholding taxes returned per CARE act

[richiett7491]

If you enter a form 5498 into Turbo will it credit the number paid into a IRA to reduce tax basis by that amount of money. IF so that would reshape tax basis to correct. My IRA firm said that that is the why to reconcile to the correct tax basis. That form was sent to the IRS

[SamS1]

There is no where to enter a 5498 into TurboTax.  The form 5498 reports to the IRS IRA contributions, the market value of the account on 12/31, required minimum distributions amounts and dates, and rollovers.  Normally the 2020 5498 is not issued until after 4/15/21, as a taxpayer has until 4/15 to make a 2020 IRA contribution.  You can request TurboTax track your non-deductible tax contributions if you make a traditional IRA contribution that is not tax deductible.  When you start taking distributions from your IRA is when you will need the non-deductible contributions so to not pay tax on the non-deductible portion of the distribution.

[rfengst24]

A recent TT update has removed any ability to get the RMD questions shown.  I have deleted and re-entered the 1099R as well as temporarily adjusted my age to 72 but no additional questions from the interview after the initial was this an RMD questions is shown and the distribution remains fully taxed.  TT needs to get a simple and straightforward fix on this ASAP.

[rfengst24]

Found a fix.  This was an inherited IRA housed at Charles Schwab.  By unchecking IRA was inherited from Schwab, the proceeds from the RMD questions came back.  The Rollover (rollback) is now accounted for and shows on the 1040.

[psyadam]

Just deleted both of my IRA distributions and re-downloaded them. Didn't check off box of RMD.  Checked off everything COVID as well as that I repaid the distribution. AND, my 1040 still shows the distribution and one-third of it as a taxable amount.

What is the solution and when will TurboTax fix this? Been a problem since December 2020!

[psyadam]

Just deleted both of my IRA distributions (again) and re-downloaded them. Didn't check off box of RMD.  Checked off everything COVID as well as that I repaid the distribution. AND, my 1040 still shows the distribution and one-third of it as a taxable amount. Turbotax only told me that I didn't need to make early distribution penalty (which is not an issue anyway as would have been an RMD otherwise).

What is the solution and when will TurboTax fix this? Been a problem since December 2020!

[DawnC]

Have you tried manually entering them instead of importing them?    When you say NO to the RMD follow-up, you will be asked what you did with the money.   If you tell TurboTax that you put the money back on that screen, it will remove those amounts for taxable income.   If you returned all of the money from both distributions, you should not be asked the covid questions since you should not have any 2020 distribution amounts - they were all rolled over. 

[psyadam]

I manually entered the amounts and got the same result that it puts one-third on my 1040 as taxable income even though checked I paid it all back.

Clarification: I clicked 'no' for RMD, yet did click that this as 100% a COVID distribution, would that have made the difference even though clicked 100% repaid? 

[psyadam]

The screens ask the COVID questions even though I entered I returned the distribution.

[psyadam]

And FYI, it asks the COVID questions before it asks if I returned the distribution. I've clicked all the different combinations and still enters one third as taxable income on the 1040. 

[dmertz]

If you returned the distribution by the deadline for repaying an RMD, it's not a Coronavirus-Related Distribution.