RMD from deceased spouse's IRA shows as non taxable, as surviving spouse elected to treat it as her own. Is this accurate?

[tseringer]

My mother in-law elected the spousal continuation option of her deceased spouse's IRA, and requested that the insurance company calculate the RMD.  This was done, and she received a 1099 R that was recorded in TurboTax.  TurboTax shows the sum of all distributions, and then deducts the entire amount of this distribution from taxable income, as inherited and treated as own.  In reviewing the 2015 return, the distribution was both larger and treated as taxable income.  I will verify the accuracy of the size of the distribution with the provider, but it does not seem right that this distribution would be taxable on a joint return while the spouse was alive, but not taxable on the return in the year of his death.

[MiriamF · Accepted solution]

You are correct. The RMD distribution should receive the same tax treatment as it got when your father-in-law was alive.

What was the taxable amount in Box 2? and what were the codes in Box 7?

If Box 2 was empty, then you would need to respond to the question, How much was taxable in the interview sequence. The taxable amount should be the same as for your father-in-law's RMD. If he took out more than the RMD, apply the same percentage for the taxable amount.

If all of this information has been entered correctly, then your best option would be to delete this form, then re-enter it.

[PaulsJD]

I had the same problem the issue is a poorly worded question in Turbo Tax where it is supposed to be asking did you put the RMD Distribution into the surviving spouse's IRA. But the question actually sounds like it is asking if you put the deceased Spouses IRA into the surviving Spouse's IRA and the help for the question makes it sound like it is talking about the IRA amount and not the Distribution.  I changed my answer to that question and it went from non-taxable to taxable.