IRA withdrawal and repayment

[weg]

I am 72 and retired.  I withdrew $45K from my IRA to buy a home.  This same amount was repaid back to the IRA within 60 days.  Somehow reporting on Turbo tax reflects both the minimal required amount and withdrawal amount resulting in my owing Taxes?  How do I offset the repayment so I am not taxed on $45000.00 since it was repaid in 60 days?

[VolvoGirl]

Was this in addition to the RMD you have to take?  You can't put the RMD back.  You have to take it and pay tax on the RMD.

If you are looking at a summary screen or review screen those show the full amount as income and lump a lot of stuff together. You need to check the actual 1040 form and make sure it's right.

If you rolled it over or put it back it should say Rollover to the left of the taxable amount on 4b or 4d.   For 2019 IRA distributions show up on 1040 line 4a and the taxable amount on 4b.  Pensions, 401K and Annuities go on lines 4c & 4d.

Was there any withholding taken out?  If you rolled it over and had taxes withheld,  you needed to add the withholding back in (from your own money) when you deposited it into the new account OR the withholding will become a taxable distribution itself.

[weg]

The issue is I borrowed $45000 from my IRA in October and repaid the full amount in November 2019.  The1099 R reflects $61504.19 which includes both the above amount and my RMD.  Turbo states I have to pay taxes of $7400 on the total amount.  Since repaid in 60 days why am I taxed on The entire $45K when it was repaid?  Form 1099R..  

The only amounts on this tax form are columns 1 and 2a. for $61504.19.  Shouldn't I only be liable for taxes due on the RMD and not the $45K??

[VolvoGirl]

Check your actual 1040 line 4b and see how much is taxable.  The tax may be right and just on the RMD.  Yes the taxable amount should be the 61,504 - 45,000 = 16,504.

Or if it's saying more is taxable then delete the 1099R and re enter it again.  That may clear something out or give you the right questions to answer.  Did you say you rolled it over?  You are suppose to say you rolled part of it over even if you put it back into the same account.

[weg]

The issue is the 1099R reflects on line 2a the withdrawal amount (even though repaid in 60 days) for both the withdrawal and RMD.  It should not reflect this $45k withdrawal an repayment as TAXABLE.  Form 4b also shows the total amount therefore I owe taxes on the $45k which is incorrect.  How do I report this repayment on Turbo Tax

[VolvoGirl]

I'll page another user @dmertz  

[dmertz]

"The issue is the 1099R reflects on line 2a the withdrawal amount (even though repaid in 60 days) for both the withdrawal and RMD."

That's correct reporting on the Form 1099-R and the Form 1099-R must be entered as received.

In the questions that follow entering this Form 1099-R, did you indicate that part was RMD, indicate that $16,504.19 was RMD, indicate that you moved the money to another retirement account (or returned it to the same account), indicated that you rolled over part equaling $45,000 and cashed out part?  I suspect that you did not correctly indicate the rollover of the $45,000.

[Bromalade]

I have the same simple question but the responder is making it too complicated.   I borrowed money and paid it back.  Don't think amount RMDs.  The IRS thinks this is taxable.  How do I convince Turbotax and the IRS the money was repaid?

[SamS1]

Did you pay it back to your IRA within 60 Days of taking it out?  If you did, then it should not be taxable.  TurboTax will ask you what you did with the money and if you put it back into the account or another.  Indicate you did the continue through the screens. You should receive the form 5329 probably sometime in May.  This form is reported to the IRS and should indicate your IRA contributions and rollovers for 2020. This would be the form you need to provide the IRS if you repaid the distribution in time.

[Bromalade]

Thanks!  That is helpful. Yes, was repaid within 60 days.   The other minor question: while filling out the distribution page, do I enter "0" for the taxable amount?  (My guess: it's moot if you subsequently indicate it was rolled over.)

[SamS1]

No.  You need to enter all 1099R information into TurboTax as received.  TurboTax will make the adjustment based on how you answer the follow-up questions.  You can you review how it looks on your tax return at any time.  You can review your 1040 in the following steps:

1. While in your TurboTax account, select Tax Tools in the left margin
2. Select Tools
3. Select View a Tax Summary
4. In the left margin, select Preview my 1040
5. When finished, select "Back"

The 1040 should not show any taxability on line 4b.

[kishor desai]

How to report an IRA distribution that was return same IRA account within 60 Days in the year 2020.

[VolvoGirl]

@kishor desai   That's been covered above in this thread.  Was it for an RMD?

Since there is no RMD required for 2020, after you enter the 1099R say it was NOT an RMD and then that you rolled it over (even if back into the same account). Was any withholding taken out? If it was then did you replace the withholding with your own money? Otherwise the withholding will be a taxable distribution itself. You will get credit for the withholding taken out on 1040 line 25b.

If you already entered the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and renter the 1099-R form.