Why does 1009-R Box7 Code H trigger a taxable event?

[mkelly1717]

Box7 Code H is listed on my 1099-R for a "Roth 401k to Roth IRA" rollover, but the entire amount shows up in the taxable income.  When I right click to go to the source of that calculation, the popup lists the correct amount, but the number on the form is wrong.  I have already submitted a ticket on this, but wanted to list it here in case anyone else encounters it, or finds something I might be missing.

[macuser_22]

Where do you see it as taxable income?   Code H should be on the 1040 line 4a not 4b.

The summary screen shows total gross income, both taxable and not taxable.

Look on the 1040 form line 4b for the taxable amount.

[mkelly1717]

4a and b are zero, which is correct.  4c contains '401k distribution' and 'Roth 401k rollover to roth IRA', but then 4d contains exactly 2x the 401k distribution.  If I delete the rollover, then the 401k distribution changes to the correct amount.

[mkelly1717]

If I make up a number like 50k for 401k distribution, then the 1099-R summary line 26 shows correct as 50k.  If I create another 1099-R for a code H rollover that's even just 1 dollar, then that line 26 doubles to 100k as soon as I enter the Code H, which is not correct.  That's the problem I submitted, and tried to describe above.

[macuser_22]

Sorry, I meant line 4c and 4d (the new lines for 2019).

Did you also enter a code G 1099-R?

@dmertz - does this sound like the code "H" bug report that you submitted that creates a double taxable amount?

[SteamTrain]

@mkelly1717 

Keep any eye on this...it's being worked on  (But may not cover all situations):

  https://ttlc.intuit.com/community/tax-topics/help/why-is-my-1099-r-income-being-taxed-twice/00/98652...

___________________

@macuser_22   dmertz has a discussion in the lounge covering at least one situation that this occurs for...so yeah, it's being worked on

[macuser_22]

@mkelly1717 - See this new TurboTax article:

https://ttlc.intuit.com/community/tax-topics/help/why-is-my-1099-r-income-being-taxed-twice/00/98652...

[dmertz]

Yes, this is the code H bug I reported.  A possible workaround is to delete all Forms 1099-R and enter the code H Form 1099-R first, followed by the other Forms 1099-R.

[mkelly1717]

Y'all are awesome.  This does sound exactly like what is coined as the "the code H bug … that creates a double taxable amount".  An hour ago I got a notification of an update, and guess what is magically gone?  ….The double taxable amount from a Code 2 1099-R, when a Code H 1099-R is also present.  My wife is convinced that my problem submittal 2hrs ago caused this update, but I know that software fixes, compiling, and rollouts don't happen that fast.

As far as my experimentation has gone, this update solved the Code H problem, at least for my case.  I'm pleased and impressed that this was already being worked on.  Thank you all so much. 

My 2nd submitted problem, the "1099-R Code 2B" problem where TurboTax flags the 2nd code "B" as an error, is still there, but it doesn't impact my return enough for me to make a fuss about it, but all the experts will still want to know its still there. 

Thanks again, everyone.  TurboTax makes tax preparation almost enjoyable, at least for a modestly OCD former Engineer  :^)

[dmertz]

The code 2B issue is likely that when asked if the distribution was from a Roth IRA you mistakenly answered Yes.  This is a trick question by TurboTax since code B indicates that the distribution is not from a Roth IRA but is instead a distribution from a designated Roth account in a qualified retirement plan like a 401(k).  Go back and edit the code 2B Form 1099-R and be sure to answer No when asked if the distribution is from a Roth IRA.

I've complained about this issue for years and Intuit refuses to eliminate the unnecessary question, saying that the it's not a TurboTax problem that the user answered the question incorrectly.  It trips up many people every year.

[mkelly1717]

Again, awesome.  That worked. 

Thanks.

[dmertz]

I concur that the code H bug appears to have been fixed in today's update, R14.

[SimplySchely]

Code H bug is still happening while using TurboTax through Credit Karma

[dmertz]

Yes, the bug is back. A code-H Form 1099-R a blank box 2a and box 2b Taxable amount not determined marked is being erroneously treated as taxable.

Note, however, a code-H Form 1099-R wit a blank box 2a and box 2b Taxable amount not determined marked is a Form 1099-R that has been prepared incorrectly by the payer.  Code H means that the distribution is unconditionally nontaxable, so box 2b Taxable amount not determined should never be marked on a code-H Form 1099-R.

Assuming that this truly was a rollover to a Roth IRA from a designated Roth account in an employer's qualified retirement plan and the code H is the correct code for the distribution, my recommendation is to leave box 2b Taxable amount not determined unmarked on TurboTax's 1099-R form when the code in box 7 is H.