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RK DIY Taxes
Returning Member

Schedule D and form 8949

I invested part of my 2020 401(k) retirement income in a mutual fund. I failed to correctly identify this in my 2020 form 1040 filing and the IRS tells me I need to complete Schedule D and Form 8949. How can I use TurboTax to generate these forms?

11 Replies

Schedule D and form 8949

Did you file online? Can you log in to your account?

 

You can always download the forms from the IRS web site.

 

https://www.irs.gov/pub/irs-prior/f1040sd--2020.pdf

 

https://www.irs.gov/pub/irs-prior/f8949--2020.pdf

RK DIY Taxes
Returning Member

Schedule D and form 8949

Yes, I did file electronically and I can login to my IRS account. I have downloaded the forms and instructions, but they are asking about the sale of property or stocks of which I did neither. I simply reinvested part of my 401(k) retirement income in a mutual fund. 

 

Thanks for your reply.

Schedule D and form 8949

What happens inside a 401K is not reported on an income tax return.   So do you have a broker's account outside of a retirement plan or IRA that you had sales in it ?   If so the broker will issue you a 1099-B for the sales that is reported on the personal return on form 8949 and the Sch D.  

Schedule D and form 8949

And if you took a withdrawal from a 401K or IRA account and invested it in another account (not in another 401K or IRA)  you would get a 1099R for the withdrawal.  Did you report a 1099R on your return?

 

Why does the IRS think you had sales?  Did you get a 1099B?  

Schedule D and form 8949

you should write back to IRS that you had no investment activity to report on Schedule D.

But, if your Form 1040 has the box checked or a non-zero amount on Line 7, that's a horse of a different color.

 Reply back for followup.

 

@RK DIY Taxes 

 

Also, make sure you're really talking to the IRS.

RK DIY Taxes
Returning Member

Schedule D and form 8949

My From 1040-SR has both a non-zero value in line 7 and the box is checked. I am fairly confident I am talking to the IRS; I was vetted by ID.me (requiring a video chat to complete) and login through www.irs.gov

 

I'm not sure I like being in a corral with different colored horses! My situation must be fairly common; I invested part of my 401(k) retirement income (taxes already withheld) in a mutual fund, and the IRS feels I owe them taxes on it.

 

Thanks for your advice.

Schedule D and form 8949

Ok ... so did you take a distribution from the 401K and then use the money to invest in a non retirement account ?   If so you DO owe taxes on the distribution no matter what you did with the cash.

 

 

RK DIY Taxes
Returning Member

Schedule D and form 8949

Yes, I received a 1099-R and filed it with my return. The 1099-B section of my mutual fund is all zeros. Perhaps the IRS thinks I had sales because the value of my mutual fund increased - a rarity in 2020.

 

Thanks for your comments.

RK DIY Taxes
Returning Member

Schedule D and form 8949

Even if the distribution from my 401(k) already had taxes withheld?

Schedule D and form 8949

See my answer here to another person who got that letter.

It has nothing to do with your 401k

 

https://ttlc.intuit.com/community/after-you-file/discussion/re-forms-to-submit-with-schedule-d/01/27...

 

@RK DIY Taxes 

RK DIY Taxes
Returning Member

Schedule D and form 8949

I have completed Schedule D and Form 8949 and submitted them to the IRS. Thank you for your helpful advice and patience with me. If I had explained my situation more completely it may have avoided some of the rabbit holes.  

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