Do I need to report previously taxed distributions on Saver's credit Form 8880?

[Anonymous]

I reported and paid taxes on a 401k distribution/withdrawal for tax years 2017 and 2018. I did not qualify for the Retirement Saver's credit in 2017 and 2018 because my AGI was over the limit. For 2019, my AGI is under the limit and I do qualify for the Saver's credit.  Do I need to report the 2017 and 2018 distributions/withdrawals again for the 2019 tax year?  Will I get taxed again?

[dmertz · Accepted solution]

Yes, you must enter the distributions made in 2017 and 2018 that you did not roll over.  These amounts will not be taxed again but are subtracted from the amount of your new contributions to determine how much of your new contributions are eligible for consideration of the credit.  This prevents people from using the money that is already retirement savings from using that money to get the credit by just taking money out and putting it back as a new contribution.  The intent of the credit is to encourage increases in retirement savings, not to promote recycling of existing retirement savings.