topic IRA Distribution and Taxes Owed in Get your taxes done using TurboTax

IRA Distribution and Taxes Owed

pamcpet — Wed, 24 Feb 2021 20:37:25 GMT

I am doing my elderly dad's taxes for him. He received a 1099R with a large IRA distribution, of which only about 25 percent was the taxable amount and 10 percent of the taxable amount was withheld for Federal taxes. however, when I checked the IRA/SEP/SIMPLE, Federal Tax at top went from a 2K refund to 14K due and State Tax from a 1K refund to 5K due. His only other income is Social Security.

Is there something I may have missed on these forms to cause an error like this or is it correct? Although the 1099R says only 20K is taxable, the full 75K was added to his AGI.

Re: IRA Distribution and Taxes Owed

DaveF1006 — Wed, 24 Feb 2021 21:03:32 GMT

The issue is, why did the trustee deem only $25,000 was taxable? From what you told me, it sounds like $75,000 should have been taxable unless there were non-deductible contributions made to the IRA plan. The error is though is that if this was from a traditional IRA that was funded with pre-tax dollars, the entire distribution is taxable and taxes withheld should have based off of a $75,000 distribution.

Contact the trustee and asked why they only declared $25,000 taxable and withheld taxes from that amount.

Re: IRA Distribution and Taxes Owed

pamcpet — Wed, 24 Feb 2021 23:17:22 GMT

Thank you very much. I was able to reach the trustee and found out the IRA/SEP/SIMPLE box was not supposed to be checked. Once I unchecked it, the balance due dropped by 14K!