The new tax bill eliminated the RMD I owed for 2020 filing. What happens to the federal tax that was withheld by the custodian when the RMD was issued to me?

[VolvoGirl]

If you put it back in you don't pay tax on it.  After you enter the 1099R Turbo Tax asks if you rolled it over.  Say YES even if you put it back into the same account.  You will still get credit for the withholding in box 4.  

But if you did not put back the full gross amount (before the withholding was taken) out then the withholding amount itself becomes taxable income.  And you still get credit for the withholding.

Turbo Tax will show it as income on the Review and summary screens but on your actual 1040 it will say ROLLOVER by the taxable line.

[macuser_22]

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@kokjohnj wrote:

If I check the box (No, none of this withdrawal was an RMD), won't I still have to pay tax on this? 

How would IRS know the fund was rolled back into the account?

Does Turbo Tax still account for this as income, I don't want to pay tax on funds which was reversed.

Also the tax was not paid back and shows on 1099R, how do I use this tax as credit to apply to other income?

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You enter the 1099-R as a rollover so it goes on the 1040 form line 4a as income with the word ROLLOVER next to it ans a taxable amount of 0 on line 4b.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

If this was a rollover or conversion, answer the question that you moved the money to another retirement account (can be the same account). The screen will open up with choices of where it was moved.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

It will show as income on the summary screen which shows gross income, not taxable income.

The income will be reported on line 4a on the 1040 form with the word “ROLLOVER” next to it if it was a rollover.

The taxable amount will go on line 4b.  In the case of a rollover, that amount will be zero.

[kokjohnj]

Think I'm having issue because it was inherited IRA, I don't get prompted for the questions you mention unless I say no to inherit the IRA from such and such.  If I do say no to inherited the IRA it does prompt me like you said.  But the amount box 4 for tax withheld does increase my federal refund like it should.

[VolvoGirl]

@macuser_22   When I enter a test IRA RMD in Online it then asks me when the original owner was born?  And how old they would be if they lived.  I didn't say it was inherited.  Is that right?  I shouldn't get that screen.  Can you check or pass it on?

[macuser_22]

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@VolvoGirl wrote:

@macuser_22   When I enter a test IRA RMD in Online it then asks me when the original owner was born?  And how old they would be if they lived.  I didn't say it was inherited.  Is that right?  I shouldn't get that screen.  Can you check or pass it on?

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It should only ask that question if the box 7 code was a 4, which IS inherited or can be in the case of a T  - you do  not need to say that it is inherited the code says that.     What box 7 code did you enter?

[VolvoGirl]

I entered a 7.   I couldn't get past that screen.  I don't know what triggered it.  I said none of the above on the list of uncommon situations which was the page right before.  If I check the box I inherited it then it asks me from who.  If I fill that out then it does not ask me about the original owner screen.   I think the wording is just wrong on that screen or that screen is not needed.

[kokjohnj]

I entered 4 (death) on box 7, then it asks me a series of questions. unitl I reach  

Was this withdrawl and RMD,

I check yes and all of distribution was an RMD

then it exits to main 1099R screen

[Critter-3]

There was NO RMD requirement in 2020 so you need to say NO to the RMD question. 

[macuser_22]

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@VolvoGirl wrote:

I entered a 7.   I couldn't get past that screen.  I don't know what triggered it.  I said none of the above on the list of uncommon situations which was the page right before.  If I check the box I inherited it then it asks me from who.  If I fill that out then it does not ask me about the original owner screen.   I think the wording is just wrong on that screen or that screen is not needed.

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If you checked the IRA box then TurboTax asks if it was inherited (I don't know why but has asked for years) but answering no shoukd not ask any more questions.   Delete and retry.

[macuser_22]

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@kokjohnj wrote:

I entered 4 (death) on box 7, then it asks me a series of questions. unitl I reach  

Was this withdrawl and RMD,

I check yes and all of distribution was an RMD

then it exits to main 1099R screen

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If this is  2020 1099-R the  answer NO, it was NOT an RMD and you were not required to even take it.  There is no RMD for 2020.

[kokjohnj]

Ok I answer NO to was this withdrawal was an RMD and it takes me back to 1099-R main screen.  Is there anyway to contact Turbo tax about bugs or errors?

[kokjohnj]

I deleted forwarded 1099R from Carry over of 2019 return and everything worked correctly.  But will not work correctly if I edit the entry, I have to start over from scratch if I make a mistake, 

[dmertz]

I've verified this undesirable behavior in the current version (R13) of 2020 TurboTax.  Once you have indicated that a distribution from an IRA is an RMD and have indicated that the beneficiary is a non-spouse, TurboTax will not treat the distribution as rolled over even if you later say that it was not RMD.  The form must be deleted and reentered to get TurboTax to behaving appropriately.  (There are other convoluted workarounds, but deleting and reentering is by far the simplest way to make the correction.)

TurboTax does not exhibit this behavior when entering a Form 1099-R for a distribution from a qualified retirement plan, apparently because TurboTax does not need to ask if the if the beneficiary is a souse or a non-spouse for a distribution from a qualified retirement plan.

[Guitarguy]

This worked like a charm.  Thank you.  The 1099-R I received showed in box 2a that the total amount was taxable, then a box was checked indicating amount taxable not determined.  But this was taken care of in Turbotax by checking the box that it was not an RMD.  I also checked RMD was not required.   Everything looks right.  Thank yo for your suggestion.

[chuckolson44]

I put back my RMD for 2020 in a timely way.  My 1099-R included the RMD in my taxable distribution.  Where/how do I reduce the taxable distribution by the amount of my redeposited RMD?