Using Premier. Didn't see any forms for divorced in 2019, distributions incident to divorce, etc. Why not or where are the forms?

[pattie-dawn]

I received 1/2 of my ex-husband's IRA incident to our January 2018 divorce, established my own IRA & used part of the money to buy another house. My 1099R includes info about net gain/losses, but Premier doesn't ask any questions? Will I be taxed on the IRA transfer incident to divorce even though my actual income is very low?

[dmertz · Accepted solution]

A transfer of an IRA incident to divorce is not reportable.  Only the distributions you received from your IRA after the transfer are reportable.  A Form 1099-R for a regular distribution from an IRA does not report net gains or losses, it only reports the gross amount distributed and is generally the amount includible in income on your tax return.  The amount includible in income is also subject to an early-distribution penalty unless an exception applies.

[pattie-dawn]

Does it matter if the “cannot be determined” box is checked and/or whether part of the distribution was used before the IRA was established? I know that a few years ago my ex-husband and I withdrew money from his IRA to remodel the basement and we paid no capital gains. None of the info asked on this year’s Premier included any capital gains forms.

[dmertz]

Any basis in an IRA is contribution or conversion basis, not capital basis.  Capital cost basis only applies to capital investments outside of an IRA or qualified retirement plan.  Any taxable amount distributed from an IRA is taxed as ordinary income.

Forms 1099-R for regular distributions from a traditional IRA (code 1, 2 or 7 by itself) are required to have the same amount in box 2a as is in box 1 and to have box 2b Taxable amount not determined marked.  The entire amount is taxable unless the IRA has basis in nondeductible traditional IRA contributions.  If your ex-husband's IRA had basis in nondeductible traditional IRA contributions, half of that would have transferred to you with the half of the IRA that transferred to you.  You would need to get the basis information from Form 8606 filed with your previously filed joint tax return.

Forms 1099-R for regular distributions from a Roth IRA (code J, T or Q by itself) are required to have box 2a blank and box 2b Taxable amount not determined marked.  If it's code J, you'll need to enter into TurboTax your basis in Roth IRA contributions and conversions.  As with a traditional IRA, half of the basis in Roth IRA contributions and conversions would have transferred to you with the transfer of half of a Roth IRA.

[pattie-dawn]

Thank you for your help. I'm still concerned that I might be using the wrong version of Turbo Tax since I was not asked to provide any information about the distribution of proceeds from sale of the marital home, any questions about the date of the divorce, etc.  I prepared all (what I believed to be) relevant documents before beginning my return and very few issues were addressed.

[dmertz]

All versions of TurboTax will present the same sections, so you can always start with the lowest version of TurboTax and TurboTax will prompt you to upgrade if you enter something that requires one of the higher-level products.  Sale of a home is under Less Common Income.  I don't think that the divorce date is relevant to preparing your tax return.