topic [Tax year 2020] Taxable IRA RMD in Retirement tax questions

[Tax year 2020] Taxable IRA RMD

jwheeler53 — Mon, 15 May 2023 15:58:28 GMT

How do I override the taxable amount of my IRA RMD distribution without creating an error? I reside in Spain and the tax treaty between Spain and the US states that my IRA distribution is taxable in Spain only. I found that I could override the taxable amount on line 10 of the 1099R summary but that causes an error. It appears that the tax calculation is correct but I still have that error. I am using TT 2020 Premier.

Re: Taxable IRA RMD

ThomasM125 — Thu, 18 Feb 2021 20:43:00 GMT

To exclude income from taxation based on a tax treaty, you need to enter the income as you normally would, then enter a negative amount to Other Income to cancel the income out. This is so the IRS will be able to match the income reported for you with the income listed on your tax return.

You can make the negative entry to Other Income by using these menu tabs in TurboTax:

Federal
Income and expenses
Less common income
Miscellaneous income
Other reportable income

Enter a description for the entry (treaty name) and the amount as a negative number.

It is recommended that you attach a description of the treaty on your tax return and mail the return in.

Re: Taxable IRA RMD

jwheeler53 — Thu, 18 Feb 2021 20:59:25 GMT

Thanks Thomas,

That did the trick. I had found that way to negate interest income but did not think to apply it to the 1099Rs. It also was applied to my regular pension.

Re: Taxable IRA RMD

jwheeler53 — Thu, 18 Feb 2021 21:21:16 GMT

One other thing. In the past, instead of a note explaining the negative other income, I just included a form 8833 for each item. I think that is the way to go.

Re: Taxable IRA RMD

ThomasM125 — Thu, 18 Feb 2021 21:32:02 GMT

Yes form 8833 Treaty-Based Return Position Disclosure will suffice, even though it does not seem to be available in TurboTax.

Re: Taxable IRA RMD

chapman8144 — Sat, 20 Mar 2021 15:07:15 GMT

I received some of my RMD in 2020 but the taxable portion doesn't show up on my 1040

Re: Taxable IRA RMD

SamS1 — Sun, 21 Mar 2021 17:29:06 GMT

First, I would recommend deleting the 1099R then re-entering. After you have logged in and are in your return in TurboTax Online:

Go to Search at the top of the screen.
Enter Form 1099-R in the search box.
You will see a Jump To function that will take you to the 1099-R input screens.
Delete the 1099R in question by clicking on the trash can next to the form
Then add a new 1099R and manually enter your 1099R.

At the financial services screens, click "Change how I enter my form" then "Type it myself"

Then follow these steps:

Review your 1099R. Is there an amount in box 2a? Is the distribution code in Box 7 a "7"? Is this a Roth IRA where you are recovering your original basis?

At the "How much of the distribution was RMD?" Enter "None"
Next indicate you did not rollover or convert the money.
That will take you back to the 1099R summary Screen.

RMDs were waived for 2020. You must indicate to TurboTax that none of the distribution was RMD. If you already enter the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and re-enter the 1099-R form.

You can verify your entry by looking at your Form 1040 line 4 or 5:

Click on "Tax Tools" in the left menu
Click "Tools"
Click "View Tax Summary" in the Tool Center window
Click on "Preview my 1040" on the left