TTAX asks the right questions but still shows the RMD amount that was repaid back into same account as income. Why?
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.
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.
I downloaded 2020 turbotax today morning and completed all requirements but it was keep asking me about my RMD value for IRA & 401K plans......means Turbotax is not updated to includes CARES Act requirements in accordance with IRS notice 2020-51. Requested to update Turbotax as soon as possible
@fuadada wrote:
I downloaded 2020 turbotax today morning and completed all requirements but it was keep asking me about my RMD value for IRA & 401K plans......means Turbotax is not updated to includes CARES Act requirements in accordance with IRS notice 2020-51. Requested to update Turbotax as soon as possible
Since there was NO RMD requirement for IRA's and 401 type plans, yu must answer the RMD question by choosing "NONE of this distribution was a RMD" because it was not. Then it will go to the screen for rollovers.
I took a RMD in late March of 2020. I returned the full amount the first of April. I then rolled over to a ROTH account a much larger amount. I received a1099-R from Fidelity for the total amount of both transactions. Turbo-Tax had a screen which allowed me to enter both of these transactions exactly as I did. It identified the exact amount I rolled back to the original IRA account and the exact amount that I transferred to the ROTH account. It looked GREAT! The next screen had the following statement, "Select CONTINUE and we'll delete the entry you've started and take you back to enter two separate1099-Rs, one for the rollover and one for the conversion. Why ask me the great questions on the previous page if you are going to delete the information I just entered, and create two new 1099-R's that will no longer agree with what Fidelity is sending them. The IRS receiving different information from me and Fidelity is what has led to me being audited in the past. Addendum: I decided to not hit the "continue" button and then go to my 1040 and see what the program did. It worked perfectly; I had a QCD in my account and the rollover in my wife's account. It created a statement sheet and printed the letters "STMT" next to line 4A and printed a document that perfectly identified the rollover amount and the QCD amount.
Ok, I tried the method in this post. Did not work.
Checked to make sure my version of TurboTax was updated, it is.
I entered the 1099R manually instead of importing it. Put the amounts in as listed on the form from my broker, box 1 and box 2a amounts were the same as the full amount of the RMD. Checked box 2a as "taxable amounts not determined". Box 7 code was 4 (Death), checked the "IRA/SEP/SIMPLE" box, no other entries from the form.
The tax due amount increased significantly.
Next screen I said the IRA was inherited, told TT that it was from someone else (my dad), and the year they passed away (2017).
Next screen told TT that Dad did not have any non-deductible IRA contribution
Next screen told TT that dad was born before 7/1/48
Next screen asks the question "Was this withdrawal an RMD?". The instructions say "If you took your RMD and later rolled it back into your account under the CARES Act, answer "NO" here." So I answered "No".
Next screen asks if the distribution was "due to COVID or a Qualified Distaster Distribution." I answered "NO"
Next Screen showed I had entered the 1099R and asked if I wanted to add another one, I clicked continue.
Next screen asks "Did you take any Distaster Distributions in prior years or repay any prior year Disaster Distributions in 2020". I answered "NO".
Next screen asks "Tell us more about this Retirement Plan distribution". I answered "I was not required to take an RMD for 2020".
The increased tax due amount did not change.
The RMD was fully repaid in 2020 on July 2.
My brokerage says they will not send out Form 5498 until May showing the repayment.
How do I get TurboTax to refigure my taxes due based on the repayment?
I do not want to pay the IRS a large overpayment and then try to claw it back later, thanks.
You will see a screen that says What Did You Do With The Money From This Payer? and one of the options is I moved the money to another retirement account (or returned it to the same retirement account.) You need to check those boxes to have it not be taxable.
That question did not appear in the dialog. I was never asked what I did with the money.
I just deleted the 1099R, let TurboTax reimport from my brokerage.
Program hardly asked me any questions at all, accepted the RMD amount and increased my taxes due by several thousand dollars.
Please, I need step by step instructions on how to get this entered correctly so that I do not send in an error ridden tax return showing thousands of $$$ in taxes due when I do not owe any at all.
Do I need to start a new return?
@dirlink wrote:
I just deleted the 1099R, let TurboTax reimport from my brokerage.
Program hardly asked me any questions at all, accepted the RMD amount and increased my taxes due by several thousand dollars.
Please, I need step by step instructions on how to get this entered correctly so that I do not send in an error ridden tax return showing thousands of $$$ in taxes due when I do not owe any at all.
Do I need to start a new return?
Delete the 1099-R and re-enter MANUALLY.
Answer the RMD question that "None of this distribution was a RMD" or RMD not required". The you should get the "Moved money" question - answer YES.
I hate to say it, but that didn't work either.
This is my screen by screen procedure used to enter the 1099R again:
Please help me, the procedure you guys describe is not working for me, the questions do not come up.
I even started a fresh return to see if it would work, and it doesn't.
I am using a PC based application of TurboTax. Version number shows as 020.000.1628.
Please help me, thanks.
Well, apparently the version number looked like a phone number, so let me try again without the . between all the numbers:
020.
000.
1628
OK - I see the problem. With a code 4, the only purpose of the "Inherited IRA" question is to PREVENT rollovers that normally are not allowed. You must answer NO to that question in order to bypass the block and get the rollover question.
Your step #3 answer must be no.
This was the answer I was looking for. Thank you. However, the program should have had this information instead of making us search for it.
@stockjohn wrote:
This was the answer I was looking for. Thank you. However, the program should have had this information instead of making us search for it.
I doubt that they will make any software changes at this late date since this is a "one time" event for 2020 only and only affects a few taxpayer that had a distribution from an inherited IRA, that was a RMD, and they rolled it back.
Your solution is correct and worked perfectly. My return was correct, filed yesterday, and accepted. Today March 26, 2020, I wanted to check on something on the return. I started up TTax. It required updates. After today's updates, even though the rollover box is checked as before, and rollover is printed next to 4b, it now shows the full amount as income. Nice BUG!!
Did the update change what you e-filed yesterday? @rhugg3 I don't see your username in this thread, so I am not sure what you are referencing since this thread has multiple users with different issues. But if you can provide some more details regarding your distribution, someone will be able to help, if needed. Did you return an RMD and e-file your return with 0 taxable income? And are you saying that after the update, your taxable income (and tax liability) has increased?
Hi DawnC,
Yes it changed what I filed yesterday. I returned an RMD, but did not check or enter anything under the RMD Section on 1099-R. I had the box checked for inherited IRA from "someone other than spouse" and the box checked for "entire distribution rolled over". Everything worked fine. "rollover" printed on 1040SR line 4b and 0 for the amount. Today after the updates, the full amount of the distribution was listed on line 2b as taxable. ALSO, the program now has me filing a 1040 and not the 1040SR that I actually filed. Only thing that changed was the program. I made no changes to my database.
In February or earlier in March I completed the forms as you say in your answer. When I went back into TT on March 28, 2021, to correct a completely different 1099 that had been amended, I did an update. After the update when I opened the file, I noticed that my tax liability changed. On Form 1040 line 4b. still said "ROLLOVER" but in the last column the amount was the original RMD. It should have been (and was prior to the update) zero.
I tried updating and answered the first Cares Act question "no" as you indicated in your answer. But this time no screen came up to answer how much I rolled over.
In addition, after I tried to edit the information, the word "ROLLOVER" disappeared.
I tried telephone support with no success.
After posting the above, I followed the thread and changed the answer to the "Inherited question" as you suggested to another member. It did correct the return and the 1040 is now showing the right amounts.
But the update DID change the program. Before the update you could answer the question "Yes" that it was an Inherited IRA. It then, as in prior years, asked the first name and year of death of the person who you inherited the IRA from.It does not ask that question anymore. If you answer "NO" it still asks those questions.
Ironically, it still asks when the deceased was born.
I agree this is a Bug
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.
I did the first thing and said the distribution was not an RMD. Where do I indicate that I returned the money to the same account? I have gone through this multiple times and I cannot figure it out.
The same thing happened to me. After reading this thread, I was able to fix it. Definitely not intuitive!
@annelouise wrote:
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.
I did the first thing and said the distribution was not an RMD. Where do I indicate that I returned the money to the same account? I have gone through this multiple times and I cannot figure it out.
What code is in box 7 on your 1099-R?
Is the IRA/SEP/SIMPLE box checked?
Delete the 1099-R you entered and re-enter.
Answer the RMD question that "None of this distribution was a RMD" or "RMD not required" depending on the TurboTax version - because it was NOT a RMD, there were no 2020 RMD's.
If this is an inherited IRA then answer the "Is this IRA inherited" with NO. The purpose of that question is to PREVENT rolling an inherited IRA over, but is allowed for 2020 only.
Then you will get the screen to say it was "moved" and all rolled over.
Also check the box that this was NOT a COVID related distributions - it was a RMD that was returned.
That will put the 1099-R box 1 amount on the 1040 form line 4a with the word ROLLOVER next to it.