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allen3gv
Level 1

Why doesn't TurboTax recalculate the taxes owed due to 1099-R Minimum Required Distribution after entering the amount of roll back as reported on Form 5498?

I rolled back my Required Minimum Distribution and after entering my 1099-R taxable amount, Turbotax asks if I rolled the distribution back into my IRA. After answering that I did roll back the entire distribution Turbotax erroneously fails to recalculate the taxes owed.  If I force the recalculation by entering 0 into line of 2a on the 1099-R, the amount of taxes owed drops substantially.
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jtax
Level 9

Why doesn't TurboTax recalculate the taxes owed due to 1099-R Minimum Required Distribution after entering the amount of roll back as reported on Form 5498?

@allen3gv thanks for clarifying the 5498 date. I just wanted to be sure it was for the right year.

 

You might need to speak to support rather than the community to solve this one.

 

When I try this using TT desktop it works as it should. When I answer the two rollover questions (see below) the box 1 amount is removed from my taxable income. It appears on 1040 line 4a but not 4b and ROLLOVER appears to the left of 4b. 

 

So I don't know what's going on with TT online, which you're using.

 

If you hack your data entry to indicate box 2a as zero and uncheck taxable amount not determined, you will get the correct (zero) amount taxed, but TT won't be showing it on the 1040 as ROLLOVER. I'm guessing there is a bit in the efile format for that as well. Whether that practically matters I don't know.

 
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5 Replies
jtax
Level 9

Why doesn't TurboTax recalculate the taxes owed due to 1099-R Minimum Required Distribution after entering the amount of roll back as reported on Form 5498?

I'm not sure what is going on. I'd suggest look carefully at all the questions TT asks about this and make sure they are answer correctly. Trying a zero amount as the taxable amount was a very smart idea so you could get a sanity check on the calculation. But there should be a way to get TT to decide that for itself.

 

Wait, what is the tax year for the 5498 you're talking about? The 5498 for TY 2020 isn't due to the IRS until 5/31/2021 and won't get to taxpayers until some time later. 

 

BTW, technically the correct term for putting money back into a IRA is a "rollover" not a "roll back" ...

 

 

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allen3gv
Level 1

Why doesn't TurboTax recalculate the taxes owed due to 1099-R Minimum Required Distribution after entering the amount of roll back as reported on Form 5498?

As you know, the CARES Act permitted me to rollover my RMD for 2020 even though I had already received it and had my Federal taxes taken out in early 2020. The "2020 Form 5498 IRA Contribution Information" shows the amount of my 2020 rollover on line 2.  I received the form from Fidelity in late January 2021.

allen3gv
Level 1

Why doesn't TurboTax recalculate the taxes owed due to 1099-R Minimum Required Distribution after entering the amount of roll back as reported on Form 5498?

My guess is that turbotax has a disconnect between the question it asks on whether you rolled your RMD over and line 4b of form 1040.  The IRS instructions say enter the entire distribution in line 4a and enter 0 (taxable amount) in line 4b if you rolled the entire distribution over.

jtax
Level 9

Why doesn't TurboTax recalculate the taxes owed due to 1099-R Minimum Required Distribution after entering the amount of roll back as reported on Form 5498?

@allen3gv thanks for clarifying the 5498 date. I just wanted to be sure it was for the right year.

 

You might need to speak to support rather than the community to solve this one.

 

When I try this using TT desktop it works as it should. When I answer the two rollover questions (see below) the box 1 amount is removed from my taxable income. It appears on 1040 line 4a but not 4b and ROLLOVER appears to the left of 4b. 

 

So I don't know what's going on with TT online, which you're using.

 

If you hack your data entry to indicate box 2a as zero and uncheck taxable amount not determined, you will get the correct (zero) amount taxed, but TT won't be showing it on the 1040 as ROLLOVER. I'm guessing there is a bit in the efile format for that as well. Whether that practically matters I don't know.

 
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

allen3gv
Level 1

Why doesn't TurboTax recalculate the taxes owed due to 1099-R Minimum Required Distribution after entering the amount of roll back as reported on Form 5498?

The on-line version of Turbotax has now been corrected.  A sentence has been added that I don't recall seeing previously immediately above the three options on whether the distribution is a partial RMD, the entire RMD, or was not an RMD.  the sentence is label IMPORTANT:  if you rolled over your RMD distribution per the cares act, press "none of the distribution was an RMD".  Having done that, the calculations zero out the taxable amount of the distribution.  As an aside, I just paraphrased the wording of the above since I don't currently have that page of Turbotax open.

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