Spouse Inherited IRA TurboTax Deluxe 2024 1099-R Questions Seem Wrong

[nphelge]

My dad passed last year and his IRA CD was inherited by my mom. Using TurboTax Deluxe 2024 on Windows to enter the data for the 1099-R my mom received for this IRA CD created last year, I enter in the distribution and federal withholding amounts and a box 7 code of Death (as example values, I'll use an RMD of $1000, which matches the amount on the 5498 my dad received early last year, and the federal withholding was $200). The next set of screens are:

• Provide answers that the IRA came from the same institution and she was his spouse and he died in 2024
• First question is whether mom put the inherited funds into her own IRA in 2024.  I answered Yes because she put the total IRA rolled over amount into her own new IRA. Selecting Yes does not change the amount shown at the top of the screen for her Federal Tax Due.
• Second question is 'You told us that mom rolled over the entire $1000 distribution to another qualified account. We see that $200 was withheld from this distribution. Did mom deposit $200 from your own funds in addition to the $800 mom received from the distribution?  Yes/No'

This second question doesn't make sense to me.  The first question asked if she put the inherited funds into her own IRA, not what she did with the RMD.  When I instead select No for the first question of whether mom put the inherited funds into her own IRA, then the Federal Tax Due amount increases by the $200 RMD amount, which makes it look like it is ignoring the federal income tax already withheld.

Answering Yes to the first question makes sense to me given that the inherited IRA amount was transferred to her new IRA , but the second question resulting from that Yes looks like a TurboTax bug since it states I said that she rolled the RMD amount to another qualified account, which wasn't what the first question asked.

Is there something I'm misunderstanding here?  Thanks in advance.

[KrisD15]

To clarify, did you go through and complete that interview? 

If this return being filed as Married Filing Jointly?

Was your dad required to make RMD before he passed?

The first question asks if the inherited IRA was cashed out or rolled-over. It does not ask how much. 

If the answer is No, did not put money into an IRA account, the funds will be treated as a full distribution. 

If the answer is Yes, the interview should continue to determine if the RMD was properly addresses (based on age). 

For the second question, we don't have enough information because we don't know if either your father or mother required the RMD for tax year 2024. 

[nphelge]

Thanks for the reply. MFJ return and as stated, the RMD of $1000 matches the RMD amount on the 5498 my dad received last year for this IRA. 

Answering Yes to the first question makes sense, due to his full IRA being rolled over to a new IRA for my mom, but that Yes leading to the second question asking the following makes no sense to me and I have no idea how to answer it, since it is asking if the RMD amount of $1000 was rolled over to another qualifying account versus asking about the value of the IRA itself:

'You told us that mom rolled over the entire $1000 distribution to another qualified account. We see that $200 was withheld from this distribution. Did mom deposit $200 from your own funds in addition to the $800 mom received from the distribution?  Yes/No'

[DianeW777]

It depends. The amount rolled over will be $800 unless your mom added the additional $200 that was withheld and paid to the IRS as payment like federal withholding on wages.

If the full $1,000 was not rolled over then she will pay tax on the $200 that was withheld.

@nphelge