TT error on Saving Credit worksheet

[persimman]

Took a dist from traditional IRA, and entered the 1099R on TT. Later re-evaluated and made a smaller (deductible) contribution. I was iterating through TT trying different contribution amounts to get the best tax benefit. The tax improvement was incredible. Finished up and got ready to file. As I was reading over the complete return, I noticed that TT gave me a nice Retirement Savings Contribution Credit.   But IRS says Reducing eligible contributions. Reduce your eligible contributions (but not below zero) by the total distributions you received during the testing period (defined later) from any IRA, plan, or annuity included above

Dug up the form 8880 on TT where they calculated my great RSCC, and noticed that TT shows ZERO for traditional RIA distributions, even though, as stated earlier, I entered the 1099R and the large distribution shows as income on 1040.  TT should be smart enough to populate form 8880 when we enter a 1099R. It shouldn't be up to me to just happen to notice that this form is filled out wrongly.   Check it out, show the programmers, get it fixed.

[BillM223]

In the Retirement Savings Contributions Credit interview in TurboTax, you are asked to specify what kinds of distributions did you have since 2022. I can see a number of reasons why TurboTax has to ask you this, rather than figuring it automatically as you suggest:

TurboTax does not maintain a database of previous distributions, so TurboTax was required to ask about distributions for 2022, 2023, and 2024.

There are also a large number of distributions that are not permitted to be listed on the 8880, line 4, such as 

• distributions that were actually rollovers, 
• distributions that were actually a loan from a qualified employer plan, 
• distributions that were actually the withdrawal of excess contribution, and so on. 

It would be difficult if not impossible for TurboTax to know these requirements based on the information that it already has; hence, TurboTax asks for specific entries for the 8880 so as to avoid mistakenly including inappropriate distributions on the 8880.

Please see the instructions for line 4 on page 2 for form 8880.