Turbo Tax indicates that I need to amend my 2019 form based on a 2020 1099-R statement. Does the same 1099-R statement get included on my 2020 taxes?

[harvey_schwartz]

My bank made an error when they made the very first RMD out of my IRA account in October 2019.  They neglected to distribute the federal and state tax amounts that I had requested.  I wound up paying these taxes when I filed my 2019 forms.

In February 2020, the bank did distribute the correct amounts to the IRS and to the California Franchise Tax Board.  The 2020 1099-R form that I entered into my 2020 Turbo Tax program reflects a gross distribution that is the sum of the 2019 and 2020 gross distribution amounts.  On the 2020 1099-R form, box 2a has a taxable amount of $0 and box 7 has a distribution code of "R".  The IRA/SEP/SIMPLE box is blank.

Based on this, the 2020 TurboTax program informed me that I need to amend my 2019 tax form.  My questions are:

   - Do I enter the 2020 1099-R form details on my 2020 taxes?

   - Do the 2020 1099-R form details get added to my amended 2019 taxes as an additional 1099-R or are they used to override the earlier 2019 1099-R details that were part of last year's original 2019 file taxes?

Thank you

[dmertz]

Nothing that you described explains why you received a code R 2020 Form 1099-R.  A code R Form 1099-R reports a recharacterization in 2020 of a traditional IRA contribution made for 2019 to be a Roth IRA contribution instead or a Roth IRA contribution made for 2019 to be a traditional IRA contribution instead.  It has nothing to do with tax withholding, any regular distribution or any RMD.  A code R Form 1099-R cannot show any tax withholding in either box 4 or in the withholding boxes for state and local taxes.

[dmertz]

I rephrased my reply and corrected a typo.

[ThomasM125]

I agree with @dmertz in that the code "R" seems inappropriate for what happened here.

I'm not absolutely sure what year the taxes were paid in for, but the 20201099-R would notify the IRS that they were paid in for 2020 one would think.  

Because of the "R" code, it would be appropriate to report the distribution in 2019 by amending your tax return. However, if the taxes paid in were reported in 2020, you may find when you submit your 2019 amended return, that you don't get credit for the taxes paid in, as they were probably applied to 2020. You may instead get them refunded when you file your 2020 tax return.

In any case, you should report the 1099-R on your 2020 tax return, since the IRS will get a copy of it and may want to know how you handled it in 2020. And you should report just the details on your 2019 tax return, assuming the form 1099-R does not duplicate anything reported on the original form 1099-R.

[Edited 3/3/21 2:38 PM PST]

@harvey_schwartz

[harvey_schwartz]

Thank you for your quick analysis and reply.  My bank has had a hard time as this is their first ever RMD distribution to anyone.  It appears then that they have made an error when using the "R" Distribution Code on the 2020 1099-R form and this led Turbo Tax to require the filing of an amended 2019 return.  I have filled out the amendment and it shows no net change but it may not be necessary to file this amended 2019 return at all.

  - Would you say that the 2020 1099-R form, as it stands now, does not belong in my 2020 return until it has been corrected by the bank? 

  - Any suggestion as to what the corrected form would contain?

[dmertz]

If the 2020 From1099-R was intended to report tax withholding, it would have code 7 (assuming that it's not an RMD from an inherited IRA, in which case it would have code 4), would be reportable and taxable on your 2020 tax return and any tax withholding would be credited on your 2020 tax return.  It would have nothing to do with your 2019 tax return.  If all they did in 2019 was fail to withhold from the gross amount of the 2019 distribution some amount for taxes, there was really nothing they could do in 2020 t correct that, so it's not clear what they were trying to do with a distribution in 2020.

[harvey_schwartz]

Thank you for your further feed back.  This is not an inherited IRA.

In 2019, the bank did not distribute the full RMD amount, it was short by the amount of the combined federal and state withholding amounts.  These amounts were taken out of the IRA and distributed to the IRS and State in 2020.  My 2019 filing included a Form 5329 to explain why there should not be a 50% penalty on the RMD shortfall.

So the 1099-R form appears to be inconsistent in that it has a $0 taxable amount (which is fitting for the "R" code according to the other responder on this thread) yet does include non-zero amounts in both the Federal and State withholding boxes since that is what occurred. 

Maybe it is only the Distribution Code that is wrong.

[dmertz · Accepted solution]

I see.  In this case it should just be reported on the 2020 tax return as a normal distribution with the gross amount in boxes 1 and 2a, box 2b taxable amount not determined marked, code 7 in box 7 and the IRA/SEP/SIMPLE box marked.  Any amount withheld for taxes (perhaps all of it) must be shown in the tax withholding boxes on the form.

Contact he bank to obtain a correction.  Ideally you would receive a corrected code R Form 1099-R showing zeros where there had previously been dollar amounts (essentially cancelling out the code R Form 1099-R) and also a the new code 7 2020 Form 1099-R described above.  The bank might just choose to issue a single Form 1099-R just correcting the box 7 code, the box 2a amount and the marking of the IRA/SEP/SIMPLE box and box 2b Taxable amount not determined, but that sort of correction can be a bit ambiguous in it's meaning.  This code 7 2020 Form 1099-R will be reportable and taxable on your 2020 tax return, with the withholding also credited on your 2020 tax return.