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Level 1
posted Feb 16, 2021 10:23:01 AM

The Cares Act allowed me to return a rmd distribution from my ira account, but that distribution still shows up on my 1099-R form. How do i avoid being taxed on it?

Rmds were suspended for 2020 and this is why i was allowed to return the distribution within the allowed time period.

0 6 864
6 Replies
Expert Alumni
Feb 16, 2021 10:39:58 AM

There is a location in the 1099-R section that allows you to tell the program that you returned the money.

 

 

 

New Member
Feb 16, 2021 11:37:14 AM

How do I get to this section about 1099 R.  I saw it once but it will not come back up.

New Member
Feb 16, 2021 11:53:53 AM

Found it.

 

Check NO under was this withdrawal an RMD for 2020

Level 1
Feb 16, 2021 1:28:52 PM

I found that checking no was not enough. you also have to say that you rolled over the distribution to another ira, which in this case is the same ira that the distribution came from.

Expert Alumni
Feb 16, 2021 1:47:36 PM

Yes, that is correct.   Since RMDs were waived for 2020, no part of the distribution was actually an RMD even though it was taken with the intention of satisfying an RMD.  In TurboTax, indicate that the distribution was not an RMD.  Indicate that you moved the money to another retirement account (or returned it to the same account), then indicate how much of the distribution you returned to the IRA.  TurboTax will include the entire gross amount on Form 1040 line 4a but exclude the amount rolled over from the amount on line 4b.  TurboTax will also include the word ROLLOVER next to the line.

 

If you did not substitute other funds for the amount withheld for taxes so as to complete the rollover of the entire gross amount of the distribution, the amount of the withholding remains distributed, not rolled over, and subject to tax; it's too late to complete a rollover of that portion of the distribution.  If the overall tax liability determined on your tax return is less than your total withholding, including the amount withheld from the IRA distribution, you'll get a tax refund.

Returning Member
Mar 4, 2021 6:27:41 PM

The rollover question never comes up. Somebody else here detailed the convoluted steps required to get the screens you refer to, but just responding and answering the questions as described won't do it.