topic Taxable amount is reduced and shown as described when you... in Retirement tax questions

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

tnnnn — Sat, 01 Jun 2019 15:34:51 GMT

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?

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

Ashby — Sat, 01 Jun 2019 15:34:53 GMT

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

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

tnnnn — Sat, 01 Jun 2019 15:34:55 GMT

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

sometimes the Refund Meter gets a bit behind. Did you cas...

fanfare — Sat, 01 Jun 2019 15:35:01 GMT

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

No - it was more than that. We had 22% taxes on the amoun...

tnnnn — Sat, 01 Jun 2019 15:35:30 GMT

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

To be honest, we could sit here all day long and speculat...

Zbucklyo — Sat, 01 Jun 2019 15:35:36 GMT

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.

Ok - so I did that just now. When it is entered under me,...

tnnnn — Sat, 01 Jun 2019 15:35:37 GMT

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.

You must answer all the follow up questions after enterin...

Texas Roger — Sat, 01 Jun 2019 15:35:38 GMT

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.

Forget line 4a (since the IRS changed tax forms this year...

Zbucklyo — Sat, 01 Jun 2019 15:35:48 GMT

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?

To @Texas Roger point, go through the full question cycle...

Zbucklyo — Sat, 01 Jun 2019 15:35:51 GMT

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.

I do answer all of the questions after changing between m...

tnnnn — Sat, 01 Jun 2019 15:35:52 GMT

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.

There is no reason for the taxable amount to be different...

Texas Roger — Sat, 01 Jun 2019 15:35:53 GMT

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/questions/1899263-what-is-the-turbotax-phone-number</a>

Be sure to check your birthdates in My Info.

SweetieJean — Sat, 01 Jun 2019 15:35:55 GMT

Be sure to check your birthdates in My Info.

If you still have problems after contacting support, let...

Zbucklyo — Sat, 01 Jun 2019 15:35:57 GMT

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.

Our bdays are correct, thanks for that suggestion though...

tnnnn — Sat, 01 Jun 2019 15:36:11 GMT

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.

I fixed it! I went back to where I entered my IRA basis i...

tnnnn — Sat, 01 Jun 2019 15:36:24 GMT

I fixed it! I went back to where I entered my IRA basis info (post-tax contributions to my own personal IRA last year) and realized I had the box checked that my husband also contributed to an IRA last year, which he didn't. So I unchecked that box and the taxes owed went down!

Taxable amount is reduced and shown as described when you...

fanfare — Sat, 01 Jun 2019 15:36:26 GMT

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.

This might be it

Zbucklyo — Sat, 01 Jun 2019 15:36:27 GMT

This might be it

Ahhhh. So in 2017 I did take an early distribution from m...

tnnnn — Sat, 01 Jun 2019 15:36:28 GMT

Ahhhh. So in 2017 I did take an early distribution from my IRA, it was much much less than the one my husband took in 2018 (2017 was due to a period of unemployment, 2018 was for a down payment on a house). We were married filing jointly in 2017 as well. Why does that impact the taxable income in the following year for a married couple?

i said prior years basis, not prior years distribution. I...

fanfare — Sat, 01 Jun 2019 15:36:30 GMT

i said prior years basis, not prior years distribution. I guess you don't have a basis in your IRA. Do you ?