input 12/31/2019 value of ira's

[dedugan]

when i input the 12-31-2019 value of my ira's my refund went down more than $1,000. why?

[VolvoGirl]

Are you over 70 1/2?  Were you supposed to take out more for the RMD?  Did it want your 2018 ending balance or 2019?

[dedugan]

73 y/o.

I took out what Schwab told me take as RMD.

2019.

It also wanted it for 2018 last year.

[ker2]

Turbo Tax for the value as of Dec. 31, 2019, but I'm thinking they meant 2018.  My husband took out what he was told to by brokerage firms.

[VolvoGirl]

@dmertz where or why does it want the 2019 ending balance?

[ker2]

it was on page after entering in the info from my 1099-r (which were RMDs)

[ker2]

Same thing happened on our tax return- why  My husband took out what he was told to take out

[dmertz]

2019 TurboTax's question asking for your 2019 year end balance in traditional IRAs has nothing to do with calculating RMDs.  2018 TurboTax does not calculate RMDs, so it has no reason to ask for your 2018 year year-end balance; it has no need to do so.  Entering the year-end balance allows TurboTax to do a correct calculation of the nontaxable and taxable amounts of the traditional IRA distribution that was reported on the Form 1099-R.  Without the entry of the year-end value, the calculation result is erroneous because TurboTax assumes a zero year-end balance in the absence of the entry.  The correct calculation reduces the erroneously high refund amount or the erroneously low balance due with your tax return.

You can see the calculations on Form 8606 Part I.

[dedugan]

"Without the entry of the year-end value, the calculation result is erroneous because TurboTax assumes a zero year-end balance in the absence of the entry."

That makes no sense.  Why does TT assume a zero y/e balance?

TT has all the info it needs to calculate taxes without asking for the 2019 y/e balance.  Calculating in the order in which it asks the questions just confuses and alarms users when the tax due increases right after the input.

Do better TT, or users will go elsewhere.

[dmertz]

"TT has all the info it needs to calculate taxes without asking for the 2019 y/e balance."

That's a false statement.  There are two situations where your tax liability cannot be determined without entering your year-end balance in traditional IRAs:  The calculation of the nontaxable amount of a traditional IRA contribution when you have basis in nondeductible traditional IRA contributions (Form 8606) and the calculation of a penalty for an excess traditional IRA contribution (Form 5329).

To complete the calculations on Form 8606, TurboTax has to assume something for the missing amount needed on line 6.

Years ago I suggested to Intuit that TurboTax's Smart Check should issue an error indication if Form 8606 is needed to calculate the nontaxable and taxable amounts of a traditional IRA distribution if the year-end value has not been provided, but they have not implemented this suggestion.

Keep in mind that any calculation of a refund or balance due is almost meaningless until you have fully completed your tax return.

[ker2]

Still not understanding.  The distributions taken in 2019 were based on the value of IRAs at the end of 2018 not 2019.  Also, when inputting the info from the 1099s we marked what was for charity and what was not.  Those for charity were not taxable and those that weren't for charity were taxable.  The value of the IRAs at the end of 2019 have nothing to do with income so why should it effect and lower refund?

I looked at the 8600-1 form you mentioned and the numbers there don't add up to the source they were supposed to come from.

[dmertz]

"The distributions taken in 2019 were based on the value of IRAs at the end of 2018 not 2019."

ker2, you are continuing to think that TurboTax is asking for a year-end balance to calculate RMDs.  TurboTax is not.  TurboTax does not calculate RMDs.  Because TurboTax doesn't calculate RMDs, 2019 TurboTax has no need to know your 2018 year-end value and will not ask for it.

" those that weren't for charity were taxable."

Apparently not entirely taxable.  TurboTax is appropriately asking for your 2019 year-end balance because you apparently have indicated to TurboTax that you have basis in nondeductible traditional IRA contributions and your 2019 year-end balance is required on Form 8606 to be able to calculate the amount of the nontaxable portion of the your distributions that were not QCDs.  Until you enter the year-end balance, TurboTax cannot properly calculate the nontaxable amount and calculates a nontaxable amount that is too high, causing TurboTax's refund display to show an inflated amount.  Once you enter your 2019 year-end balance, TurboTax recalculates the correct lower amount that is nontaxable, appropriately lowering your refund.

Look at your 2019 Form 8606 to see the calculation of the nontaxable and taxable amounts of your traditional IRA distributions that were not QCDs.  Your 2019 year-end balance is required to be present on line 6 to be able to do the proper calculation.

(The only other reason that 2019 TurboTax would ask for a a 2019 year-end balance is if you have excess contributions in your IRA, but that's unlikely for someone subject to RMDs.)

[CRS3]

For my 2019 IRS filing, why does turbo tax want me to report the  value of my Traditional IRA's for year end 2019?

[CRS3]

year end 2019

[dmertz]

TurboTax asks for this in anticipation of two possible situations.  TurboTax needs to know this to determine the penalty if you have an excess contribution in a Traditional IRA for 2019 or to calculate the taxable amount of a traditional IRA distribution or Roth conversion made in 2019 if you have basis in nondeductible traditional IRA contributions.