Am I being taxed twice for traditional IRA RMD? Taxes were taken out but how I tell TurboTax that this was done?

[Irasaco]

I am re-doing my 2023 taxes because I left out an required minimum distribution (RMD) from an inherited traditional IRA. A relative passed away in late 2023, and my siblings and I were her sole heirs. My share of her overall RMD was about $7200, and the bank distributing the IRA took taxes out of it, so the bank sent me a check for just under $5100.

When I received the 1099-R from the bank, it had in box 1 "gross distribution", $7200. The 1099-R also shows the amount that I paid in taxes in box 4 (Federal) and box 14 (State).  There is no box showing the net amount after those taxes were take out.  But when I use TurboTax, for the 2023 income, it asks for the "gross distribution" in box 1. This increases my total income by $7200, which I would then have to pay taxes. But I already paid those taxes as the 1099-R shows when I received the $5100.

Is there a way to indicate on TurboTax that taxes were already taken out?

Or, does the Federal and State already know how much I paid in taxes on the amount? And I keep using the $7200 figure.

[DoninGA]

Did not the Form 1099-R that you received for the distribution have the federal taxes withheld entered in box 4 of the form?

[VolvoGirl · Accepted solution]

You didn’t actually pay the tax or the 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½). You had taxes withheld like from your paycheck. You still have to enter the whole gross amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due. The Gross amount shows up on 1040 line 4a or 5a and the taxable amount on 4b/5b. You get credit for the  withholding on 1040 line 25b.

The tax withholding taken out should be on the 1099R in box 4 for federal and state withholding is in box 14.

[Irasaco]

Yes, box 4 of the 1099-R that I received shows the taxes taken out. But TurboTax is asking for the "gross distribution" in box 1, which is before those taxes were taken out.  Should I just enter the total amount after taxes (box 1 minus the sum of box 4 and box 14)?

[VolvoGirl · Accepted solution]

No you enter the gross total before taxes in box 1.  Read my post above again.  

[Irasaco]

Oh, I see now. So later in TurboTax, I have to enter the amount of taxes that were taken out on this 1099-R form? Where does that occur in TurboTax?

[DoninGA · Accepted solution]

To enter, edit or delete a form 1099-R -

Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Retirement Plans and Social Security
On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button

Or enter 1099-r in the Search box located in the upper right of the program screen. Click on Jump to 1099-R

[VolvoGirl]

You enter box 4 and 14 on the same entry screen as box 1.  Go back and fill out the 1099R screen completely.  There are also codes and check boxes you need to enter.  Like a code in box 7 and maybe a checkmark in the little  IRA/SEP/SIMPLE box.   Do you even have the 1099R form yet from the bank?  You need to wait for it.   

[Irasaco]

Thanks for this tip. I found the income taxes section under "Deductions and Credits" in TurboTax and I checked the figures. Fortunately, my tax bracket does not change with the added income. So, I don't owe any additional tax to what I have already paid,

[VolvoGirl]

You didn’t enter the withholding under Deductions & Credits did you?   That is wrong.  You only enter the 1099R withholding on the 1099R income screen.   

[Irasaco]

Yes, I received the 1099-R from the bank, but it arrived after I filed my 2023 taxes. So that is why I am re-doing the 2023 taxes.