topic Repaying an IRA in the following tax year in Get your taxes done using TurboTax

Repaying an IRA in the following tax year

dagood39 — Sat, 10 Aug 2019 19:39:25 GMT

If I take an IRA distribution in November or December 2019 and pay it back in 2020 (within 60 days) how do I handle it? The 1099-R I receive as of December 31, 2019 will not reflect the payback. Should I take the credit for the payback on my 2019 tax return or 2020 return?

Re: Repaying an IRA in the following tax year

macuser_22 — Sat, 10 Aug 2019 20:12:55 GMT

A 1099-R NEVER indicates a payback (rollover) reguardless of when it is done. A 1099-R only report a distribution. You indicate on your tax return by telling TurboTax that the money was rolled over. The year is not materiel as long as it was within 60 days. The Financial institution receiving the rollover will report it to the IRS as a rollover in May of the year that it was rolled over on a 5498 form.

You report a 2019 1099-R on your 2019 tax return - nothing is reported in 2020.

Re: Repaying an IRA in the following tax year

Critter — Sat, 10 Aug 2019 21:25:41 GMT

FYI ... new rules state you can only do one non direct IRA rollover in a 365 day period ... the days of making multiple 60 loans to ourselves from an IRA are gone.

Re: Repaying an IRA in the following tax year

macuser_22 — Sat, 10 Aug 2019 22:49:33 GMT

That is true.

Application of one-rollover-per-year limitation.

You can make only one rollover from an IRA to another (or the same) IRA in any 1-year period regardless of the number of IRAs you own. The limit will apply by aggregating all of an individual's IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit. However, trustee-to-trustee transfers between IRAs aren’t limited and rollovers from traditional IRAs to Roth IRAs (conversions) aren’t limited.

The 1-year clock starts at the time of a rollover.

Re: Repaying an IRA in the following tax year

dagood39 — Sun, 11 Aug 2019 02:15:37 GMT

Thank you so much for your response. It was very helpful.

Re: Repaying an IRA in the following tax year

crafty redhead — Fri, 18 Oct 2019 04:21:12 GMT

I have this exact situation, in which I paid back money within the 60 days, but my bank (Wells Fargo) did NOT reflect this in the 5498. And I called them and they said something like "oh we don't report that information." so all I could figure out to do was to get the bank statements that show when I paid the money back, and now I have to amend my tax return and main the bank statements in to the IRS to show what was done. I'm not even sure where I'm supposed to put this "rollover" thing in Turbotax.

Re: Repaying an IRA in the following tax year

macuser_22 — Fri, 18 Oct 2019 04:33:35 GMT

@crafty redhead wrote:

I have this exact situation, in which I paid back money within the 60 days, but my bank (Wells Fargo) did NOT reflect this in the 5498. And I called them and they said something like "oh we don't report that information." so all I could figure out to do was to get the bank statements that show when I paid the money back, and now I have to amend my tax return and main the bank statements in to the IRS to show what was done. I'm not even sure where I'm supposed to put this "rollover" thing in Turbotax.

A 5498 is for your information and does not go on your tax return. But the Bank is required by law to report a 60 day rollover on box 2 of a 5498 form in May of the year after the rollover occurred.

Whether they did that of not is immaterial since you must report the rollover on your tax return. You should have a 1099-R for the distribution.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

If this was a rollover or conversion, answer the question that you moved the money to another retirement account (can be the same account). The screen will open up with choices of where it was moved.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

It will show as income on the summary screen which shows gross income, not taxable income.

The income will be reported on line 4a on the 1040 form with the word “ROLLOVER” next to it if it was a rollover.

The taxable amount will go on line 4b. In the case of a rollover, that amount will be zero.

Re: Repaying an IRA in the following tax year

crafty redhead — Fri, 18 Oct 2019 04:43:02 GMT

I should have added, I am having to do this for tax year 2015. I had to get the software to download. I've found the form, but I can't edit it. :(

Re: Repaying an IRA in the following tax year

crafty redhead — Fri, 18 Oct 2019 04:48:27 GMT

oh okay I figured out how to open the form.

So my situation was I got a distribution of $6600, and I paid back $2500 within 60 days. (well technically I paid back more than that, but since I took the $6600 distribution out in several chunks apparently I can only "pay back" the first one, GRRR).
I wish I could post a screenshot.
I'm on the 1099-R form, I'm on line B2, "if only part was rolled over, enter the amount of the partial rollover." so I can change the info here, I changed to $2500. Then doing that changes line B4, that says "amount of THIS distribution that may be rolled or converted to a Roth IRA" and it now says $4100. But I guess I don't understand why this is filling in, because I did NOT roll over that amount.

Re: Repaying an IRA in the following tax year

macuser_22 — Fri, 18 Oct 2019 05:12:09 GMT

@crafty redhead wrote:

I'm on line B2,

B2? Don't even attempt to do this inn the forms mode unless you know *exactally* what you are doing and what forms need to be linked together. The forms mode is for viewing forms and finding problems, not direct data entry unless you are a tax expert.

"So my situation was I got a distribution of $6600, and I paid back $2500 within 60 days. (well technically I paid back more than that, but since I took the $6600 distribution out in several chunks apparently I can only "pay back" the first one, GRRR)."

That does not make sense. If you took a $6,600 distribution what do you mean that you "paid back" (rolled over) more than that? The fact that you took the $6,600 in more than one distribution is immaterial as long as the rollover was within 60 days of the distribution. Your 2015 1099-R should show the total 2015 distribution and the allowable rollover amount would be the total amount returned within 60 days.

Enter the 1099-R as in the answer above and answer the follow up questions that you rolled over part or all of the distribution do not use the forms mode.

Re: Repaying an IRA in the following tax year

crafty redhead — Fri, 18 Oct 2019 05:15:23 GMT

the total distribution was $6600. I took it out in chunks: first $2500, then $1700, then $200, etc. I ask several bank people if this was ok and was told "as long as you pay it back within 60 days it doesn't matter" but it DID matter. You are allowed one distribution you can pay back a year, so even though I paid back the $2500 and $1700 before the 60 days, I can only count the $2500. Make sense?

And I figured out I only needed to change that one field.

Re: Repaying an IRA in the following tax year

macuser_22 — Fri, 18 Oct 2019 05:16:43 GMT

BTW: I assume that you are doing 2015 tax because you will owe additional 2015 tax, otherwise if you think you will get a refund, you are too late. Oct. 15, 2019 was the last day to claim a 2015 refund.

Re: Repaying an IRA in the following tax year

crafty redhead — Fri, 18 Oct 2019 05:17:04 GMT

well if I don't do it in forms mode, where do I do it? I could not find a place to put that info.

Re: Repaying an IRA in the following tax year

macuser_22 — Fri, 18 Oct 2019 05:19:08 GMT

@crafty redhead wrote:

well if I don't do it in forms mode, where do I do it? I could not find a place to put that info.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

If this was a rollover or conversion, answer the question that you moved the money to another retirement account (can be the same account). The screen will open up with choices of where it was moved.

(If box 7 has a code “G” it will automatically be a trustee-to-trustee rollover).

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

It will show as income on the summary screen which shows gross income, not taxable income.

The income will be reported on line 4a on the 1040 form with the word “ROLLOVER” next to it if it was a rollover.

The taxable amount will go on line 4b. In the case of a rollover, that amount will be zero.

Re: Repaying an IRA in the following tax year

crafty redhead — Fri, 18 Oct 2019 05:20:09 GMT

it took until 2019 for NY IRS to send me a bill for 2015 taxes, and I figured out what happened, I haven't paid the bill yet. I thought I'd figure this out and just pay what I owed (since I know where the problem was), but now you've got me wondering if I can even do that.

Re: Repaying an IRA in the following tax year

macuser_22 — Fri, 18 Oct 2019 05:29:36 GMT

@crafty redhead wrote:

You are allowed one distribution you can pay back a year, so even though I paid back the $2500 and $1700 before the 60 days, I can only count the $2500. Make sense?

No. You said that this was *2015*. The one rollover per year rule is for 2018 rollovers and later. For 2015 you can rollover as many distributions that you want.

Now you are adding additional information. I am answering about the *Federal* tax return, I know nothing about NY and their rules. State taxes can be different than Federal tax. I cannot help with NY tax.

Re: Repaying an IRA in the following tax year

crafty redhead — Fri, 18 Oct 2019 05:34:20 GMT

*faints*

well, then the taxes I had submitted for 2015 are already correct! I put in the rollover amounts that I paid back within 60 days (I hadn't paid back the whole $6600) but IRS billed me for tax on the whole $6600. So I'm sure the deadline for a federal refund has passed and probably for NY too.

Re: Repaying an IRA in the following tax year

crafty redhead — Fri, 18 Oct 2019 05:35:42 GMT

are you a tax professional, or just someone who knows a lot of stuff? 🙂

Re: Repaying an IRA in the following tax year

dmertz — Fri, 18 Oct 2019 15:43:47 GMT

@macuser_22, you are confusing IRA rollovers with recharacterizations of Roth conversions.

Assuming that all of the distributions were from the same IRA, the rollover limitation has been in place since the beginning. Beginning with 2015, the limitation applies to all accounts in aggregate rather than per account as was the case or distributions prior to 2015.

Apparently the $2,500 distribution was rolled over within 60 days, prohibiting the rollover of any other distributions. The rollover of the $1,700 distribution therefore constitutes a regular contribution, not a rollover contribution, and resulted in an excess contribution to the IRA to the extent that the deposit of the $1,700 exceeded the amount that you were eligible to contribute as a regular contribution for the year of the deposit (reportable as a regular contribution on the tax return for the year in which the deposit was made). Unless you obtained a return of contribution for any amount of the $1,700 deposit that was an excess contribution, you have and excess contribution subject to penalty to consider.

Wells Fargo apparently mistakenly treated this as a nonreportable trustee-to-trustee transfer where the custodian of the original IRA makes the payment directly to the receiving IRA. If this money was going back to the same account, Wells Fargo clearly botched this by not treating it as a rollover contribution. It's also clear that this will require substantial explanation to the IRS given Wells Fargo's failure to handle this properly.

Let us know if any of the $1,700 was eligible to be treated as a regular contribution for the year it was deposited or for some future year.

Re: Repaying an IRA in the following tax year

macuser_22 — Fri, 18 Oct 2019 15:52:41 GMT

@dmertz - yes the rollover rule is not new and I was confusing it. Thanks for the clarification.