Direct Roll Over from Traditional IRA to Qualified Plan treated like income

[HillDC]

I did a direct roll over this year.    

Form 1040 Line 4a -- shows the rollover amount.  4b --  "Rollover ""0" -- Correctly showing that the rollover is not taxable income. Great.  The rollover amount is also not included in Line 7b.  SUPER

HOWEVER, 

Turbo Tax including the rollover in an "income" calculation inflates my actual income for 2019 which is preventing me from taking several other deductions.  Is Turbo Tax correct?

Thanks

[AnnetteB6]

TurboTax will show the rollover amount as 'income' on some summary screens as you go through the rest of your return.  Those summary screens are not used in any calculations to determine your eligibility for other credits or deductions. 

Eligibility for credits and deductions is based on information reported on the tax return itself.  As you indicated in your question, the rollover is being reported correctly on your actual tax return, so it should not be affecting any other credits or deductions.

[HillDC]

Thanks for your reply.  I'll dig into the return to find/understand the big difference from last year's return.  Suggest TurboTax footnote the summary screens making it clear that those rollover actions aren't being included in the  credits/deductions calculations.  Such a clarification would have kept me from going into that rabbit hole.  Thanks and stay safe.

[Sojourner]

I have the same issue.    It shows in 4c on my 1040.  Should it be there as income?

[JohnB5677]

Yes, A rollover will appear on line 4c,but it should not appear in 4d, which is the taxable amount.

[ErvKlaas]

My problem is different.  I took out $200,000 from an IRA account at TIAA.  An additional $66,667 was withheld as state and federal taxes.  A week later I returned $200,000 to the IRA account.  The 1099-R that I received to file my 2019 taxes showed the full amount of $266,667 as a gross distribution.  I have determined that the $200,000 that I rolled back into the IRA is not taxed because I have 60 days to do so.  How do I show the $200,00 as a rollover in Turbotax?

[JohnB5677]

After you enter the 1099-R it will ask.

• "What did you do with the money from this payer".
• The answer is "Taxpayer moved the money to another retirement account".
• A drop down will appear
• Select "Taxpayer did a combination of rolling over, converting or cashing out the money.".
• Another drop down
• You rolled $200,000 back to the same account

You will owe tax on the $66K and possibly a 10% penalty if you're not 59 1/2

[ErvKlaas]

I did not find the question "What did you do with the money from this payer."

The problem seems to be with Box 7. TIAA placed the code number 7 in that box indicating a normal distribution.  I looked at other choices in the drop down and code "G" seems to be the proper code for my situation.  When I inserted a G the amount of refund changed that seemed correct.  Should I contact TIAA and ask them to issue me a new 1099-R? Or can I make the change myself?  I will be filing electronically.

[VolvoGirl]

Code 7 is right.  G is only for a direct transfer from the plan to the new plan and would be wrong.  Delete the 1099R and re enter it.  You must have missed something.  It should ask you what you did with it.  @dmertz 

[dmertz]

JohnB5677's most recent post above provides the details needed to correctly enter this code 7 Form 1099-R and have TurboTax treat it as a nontaxable rollover.  Ignore TurboTax's income summary and look at Form 1040 lines 4b and 4d to see that it is not being included in taxable income and that the "ROLLOVER" notation is present.

[ErvKlaas]

I did what JohnB5677 said.  Now Turbotax says that the $200,000 rollover is excess contribution and is assessing $12,000 penalty. 

I went back to edit the 1099-R and the question about rollover is gone.

[VolvoGirl]

Excess contribution means you must have also entered it under Deductions as a new contribution.  It is not a new ira contribution.  Delete it from Deductions.  Only enter the 1099R.

[dmertz]

If you are seeing a penalty, you have entered this under Deductions & Credits.  You need to delete that entry.  You can do so by deleting the IRA Contribution Worksheet. 

For Form 1099-R with code 7 in box 7, TurboTax will always present the question asking what you did with the money unless box 7 also includes code D or you indicate that the entire amount was RMD.  Delete the Form 1099-R and try again, making sure to read and answer all of the follow-up questions carefully.

[ErvKlaas]

I took advice from dmerz and looked at the 1040 form.  Line 4a shows 281667 (this includes 5273.27 from a second 1099). Line 4b shows 173,735.

None of this makes sense. How do I talk to someone at Turbotax?

[ErvKlaas]

OK, thanks. I will try again.