Hello. In 2018, performed a direct rollover of a previous employer 401k to a personal IRA ( traditional ). I received the 1099-R from the previous custodian and entered the information in this years TurboTax software. As I was progressing through the return, I took note that the amount of my refund was not increasing despite entering my deductions and, when I reached the end, TurboTax notified that I would receive a bigger refund by using the Standard Deduction. I found this odd but continued to the review anyway. On the year to year comparison screen I saw that my 2018 tax bill was significantly higher than 2017 despite the fact that my household income was substantially lower ( half ). The software was showing that my income was actually substantially HIGHER than 2017 and I found out that it was because the direct rollover was being added to my income. The 1099-R, Box 2a shows a "Taxable Amount" of $0.00 and, the Box 7 code is "G", confirming that it was a direct rollover and not a withdrawl.
Am I supposed to enter the rollover amount as an IRA contribution as well, to offset the calculation as income ?
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No, you are not supposed to enter the rollover as an IRA contribution. The rollovers do NOT count as contributions. The rollover is included in your total income, but it is not considered taxable income. Please look at your Form 1040; Line 4a should have the amount of your rollover and "rollover" should be written there. Line 4b should not have an amount of the rollover and, if that is your only 1099-R, it simply should be zero... If that is not the case, please go back, delete the 1099-R entry, and reenter the form again...please be sure to enter the form into the program exactly as it appears.
As to your deductions... standard deduction for 2018 doubled from last year; so it's entirely possible that it is a more beneficial deduction for you this year. Please read What's my standard deduction for 2018 for details.
How can I change the rollover amount?
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