Question

RMD 1099s and form 8606

Forum|Forum|3 years ago
April 3, 2023
1 reply
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I already entered my RMDs distributions on 1099R forms. Why is Turbo Tax asking for the value of my traditional IRA?

When I enter the value, the tax amount due shoots way up.

The total value of your IRAs is needed because you took a distribution from your account and the Form 1099-R probably indicates that the 'taxable amount cannot be determined' or you indicated that there had been non-deductible contributions to the IRA in the past.

When you have basis in nondeductible traditional IRA contributions, the year-end value of your traditional IRAs is necessary to accurately prepare Form 8606 to determine the taxable amount of a traditional IRA distribution (reported on your 1099-R). Until the value is entered, TurboTax assumes a $0 year end value and the calculation produces an inaccurately low taxable amount.

Here's more info on Why does IRA Basis Increase Tax?

@longdog

L

longdogAuthor

Taxes were already taken on the RMD distribution.

D

dmertz

Employee

Tax withholding is nothing more than a down-payment toward the overall tax liability determined on your tax return. It does not apply to any particular item of income. The taxable amount of your traditional IRA distribution is not determined until Form 8606 Part I is prepared and the incremental tax liability resulting from this distribution is not determined until your tax return is fully completed.