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tnnnn
New Member

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

Husband cashed out an IRA and we owe taxes. I mistakenly ticked my name as the owner, and when I went to correct it and tick my husband’s name the tax liability increased $1500! We are married filing jointly. Why would the tax liability increase depending on who’s account it was if we are married filing jointly?

1 Best answer

Accepted Solutions
fanfare
Level 15

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

Taxable amount is reduced and shown as described when you (the spouse) have a prior years basis in your IRA but your husband does not.

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27 Replies
Ashby
New Member

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

Is one of you over 59-1/2 and the other one not?
tnnnn
New Member

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

No, we are both well under 59-1/2
fanfare
Level 15

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

sometimes the Refund Meter gets a bit behind.
Did you cash out $15,000 ??
tnnnn
New Member

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

No - it was more than that. We had 22% taxes on the amount withheld at the time of withdrawal.
Zbucklyo
Level 9

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

To be honest, we could sit here all day long and speculate.  Since you have the download version, go into Forms mode and look at the tax return to see what changes when you switch the distribution from one spouse to the other.
tnnnn
New Member

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

Ok - so I did that just now. When it is entered under me, the taxable amount (1040 line 4b) is $4387 less than line 4a (the actual amount that was cashed out). When entered under my husband, there is nothing entered on line 4a, and the full amount of the cash out is listed on line 4b. So - our total taxable income is reduced $4387 when entered as my cash out versus my husband's.
Texas Roger
Level 15

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

You must answer all the follow up questions after entering the 1099-R. If you are just entering the 1099-R without answering the follow up questions, you may get a different result than when you answer the followup questions.
Zbucklyo
Level 9

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

Forget line 4a (since the IRS changed tax forms this year, the reporting in line 4a vs. 4b has gotten very confusing), the only thing that matters is 4b.

And just to make sure, all you are doing is switching the 1099r from one spouse to another, and not changing anything else about the 1099r?
Zbucklyo
Level 9

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

To @Texas Roger point, go through the full question cycle if the distribution is reported under each spouse, making sure you answer all questions identically.
tnnnn
New Member

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

I do answer all of the questions after changing between me and my husband (it asks if we used the money for various things, disaster relief etc, there's like 10 questions each). And yes - the only thing that is switched is selecting the radio button with either my name or my husband's name, no other info about the 1099r is changed, and Line 4b is lower when my name is selected.
Texas Roger
Level 15

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

There is no reason for the taxable amount to be different. Try contacting TurboTax directly to see if their support group can help find the issue: <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/1899263-what-is-the-turbotax-phone-number">https://ttlc.intuit.com...>
SweetieJean
Level 15

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

Be sure to check your birthdates in My Info.
Zbucklyo
Level 9

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

If you still have problems after contacting support, let us know, and we will have some one reach out to you so you can provide a diagnostic file.
tnnnn
New Member

Why is tax liability $1500 higher on a cashed out IRA belonging to husband than if it belonged to me?

Our bdays are correct, thanks for that suggestion though because I can see how that might affect it if entered incorrectly.

I’m at work right now but will contact support this evening. Thanks.
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