RMD Distribution from Prior Year

[Nabors711]

I received part of 2018 IRA distribution in 2019 and it was included in 2019 1099-R gross distribution and taxable amount.  How do I avoid including the 2018 distribution in 2019 income? 

[MarilynG1]

If the 2018 distribution is reported on a 2019 1099-R, (and you received the funds in 2019), you will need to report it on your 2019 return.

Click this link for more info on 2018 RMD Reported in 2019. 

[dmertz]

If you somehow reported this income on your 2018 tax return, that was a mistake and you need to amend your 2018 tax return.

[Nabors711]

I did include it in 2018 income because the IRS was going to charge a 50% penalty.  I discovered the 2018 RMD distribution shortage in February 2019 as I was filing my return.  I included it in my 2018 return and the IRS waived the penalty.

The problem is that I got the distribution in 2019 and the investment company included the 2018 amount in my 2019 1099-R.

In Turbo Tax, I seem to have 2 choices: (1.) Put a reduced amount  in the blocks 1 and 2 in the Turbo Tax 1099-R entry. or (2.)  Match the 1099-B block 1 entry in Turbo Tax but reduce the block 2 entry by the amount I included in income for 2018 and check the box that indicates that I rolled it back into the same IRA.

Which do you suggest?

[dmertz]

It was a mistake to report this income on your 2018 tax return and you must amend your 2018 tax return to remove this income.  Along with the amendment you must file Form 5329 Part IX and explanation statement requesting waiver if the 50% excess accumulation penalty.

The entire amount of income shown on the 2019 Form 1099-R must be reported on your 2019 tax return without modification.

[Nabors711]

I filed the Form 5329 with my 2018 return explaining the reason for not withdrawing the full amount of the RMD and was including the full amount of the RMD on the return.  They waived the penalty.

[dmertz]

Still, if you reported the 2018 RMD taken in 2019 as income on your 2018 tax return, that was a mistake that you must correct by amending your 2018 tax return.  The IRS won't complain about you reporting on your 2018 tax return income that was not actually income received in 2018 but will certainly object to you omitting this 2019 income from your 2019 tax return.