late RMD question...assuming IRS will grant me a penalty waiver, how will late RMD tax liability be handled???.

[forologia]

I received a 1099R for a partial RMD made in early December 2022. The remaining 19k balance of my RMD was taken on 12/30 but the stocks sold did not clear before 12/31 and the RMD was reported on 1/3/23.

I have completed my Turbotax 2022 entries and it included a 5329 asking for a waiver of the penalty on the 19k. 

• As the late filing will not include the 19k that was not reported in 2022, how will the IRS handle the additional 19k tax liability for 2022?
• Will they add the 19k income to my 2022 tax year filing and revise the tax I owe and bill me?
• If not will the 19k be added to my 2023 RMD??

Thanks for your help!!  

[MinhT1]

No.

You will not be taxed in 2022 for the amount not withdrawn, but you must file form 5329 and will be assessed a tax penalty of 50% of the amount not withdrawn.

The penalty may be waived if the account owner establishes that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. In order to qualify for this relief, you must file Form 5329 and attach a letter of explanation. 

You must then file your tax return by mail.

Please read this IRS document for more information

[72JLtax]

Can the return be amended to fix this?

[forologia]

Hi Minh,

Thanks for your response, but it did not address my bulleted questions.

I have completed my Turbotax 2022 entries, which included a 5329 asking for a waiver of the penalty on the 19k. 

• As the late filing will not include the 19k that was not reported in 2022, how will the IRS handle the additional 19k tax liability for 2022?
• Will they add the 19k income to my 2022 tax year filing, revise the tax I owe, and bill me?
• If not, will the 19k be added to my 2023 RMD??

[ShirlynW]

If an account owner fails to withdraw a RMD, fails to withdraw the full amount of the RMD, or fails to withdraw the RMD by the applicable deadline, the amount not withdrawn is taxed at 50%. 

If you do not withdraw the RMD, the RMD will continue to draw the excess tax.

RMD withdrawals are included in your taxable income when you begin withdrawing from your IRA. Distributions from your traditional IRA may be fully or partly taxable, depending on whether your IRA includes any nondeductible contributions.