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resry1
New Member

Received answer from TurboTax Diane W, EA that I need to clarify

I had this situation last year and TT referred me to form 4852 along with a place to explain why the 1099 was incorrect. I think there was some place in the interview asking for an exception. On this form, I gave the other person's information including SS #. This made it very simple. But now TT is not giving me the option.
1 Best answer

Accepted Solutions
DianeW
Expert Alumni

Received answer from TurboTax Diane W, EA that I need to clarify

There are other ways to report this nominee distribution so that you are not taxed on the full amount by completing one of the procedures below.

First Option:

You can show a negative number in Line 21 with the caption, “Distribution to Nominee YYY, SSN xxx-xx-xxxx.”  The negative number on Line 21 will adjust the income of the reported payee to the correct amount.  The reported payee will issue a Form 1099-R to the nominee payee for nominee’s share of the distribution. 

You can enter a negative income adjustment with the following menu path:

  1. Federal Taxes
  2. Wages & Income
  3. Less Common Income
  4. Miscellaneous Income
  5. Start
  6. Other Reportable Income
  7. Start
  8. Other Taxable Income
  9. Description = “Distribution to Nominee YYY, SSN xxx-xx-xxxx
  10. Amount = -$xxx

TurboTax will transfer this to your Form 1040, Line 21, Page 1.

You can e-file with this approach because the disclosure is on the face of the return at Line 21.  You can also e-file using the step below instead.

Second Option:

Or, as noted in your question here, you can choose to treat it like it's a substitute form (Form 4852), as though you didn't receive one by choosing that selection when you start the entry.  If you already entered it, you will need to delete it and start again to get the selection "I need to prepare a substitute 1099R."

When you are signed into your TurboTax account (online or desktop):

1. Use the Search box in the upper right

2. Search for 1099r

3. Jump to 1099r

4. Continue to enter your Form 1099R from the statement and check the box for the statement above. (see image attached)

View solution in original post

1 Reply
DianeW
Expert Alumni

Received answer from TurboTax Diane W, EA that I need to clarify

There are other ways to report this nominee distribution so that you are not taxed on the full amount by completing one of the procedures below.

First Option:

You can show a negative number in Line 21 with the caption, “Distribution to Nominee YYY, SSN xxx-xx-xxxx.”  The negative number on Line 21 will adjust the income of the reported payee to the correct amount.  The reported payee will issue a Form 1099-R to the nominee payee for nominee’s share of the distribution. 

You can enter a negative income adjustment with the following menu path:

  1. Federal Taxes
  2. Wages & Income
  3. Less Common Income
  4. Miscellaneous Income
  5. Start
  6. Other Reportable Income
  7. Start
  8. Other Taxable Income
  9. Description = “Distribution to Nominee YYY, SSN xxx-xx-xxxx
  10. Amount = -$xxx

TurboTax will transfer this to your Form 1040, Line 21, Page 1.

You can e-file with this approach because the disclosure is on the face of the return at Line 21.  You can also e-file using the step below instead.

Second Option:

Or, as noted in your question here, you can choose to treat it like it's a substitute form (Form 4852), as though you didn't receive one by choosing that selection when you start the entry.  If you already entered it, you will need to delete it and start again to get the selection "I need to prepare a substitute 1099R."

When you are signed into your TurboTax account (online or desktop):

1. Use the Search box in the upper right

2. Search for 1099r

3. Jump to 1099r

4. Continue to enter your Form 1099R from the statement and check the box for the statement above. (see image attached)

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