Schedule D and form 8949

[RK DIY Taxes]

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?

[tagteam]

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]

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.

[Critter-3]

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.  

[VolvoGirl]

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?  

[fanfare]

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]

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.

[Critter-3]

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]

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]

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

[fanfare]

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]

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.