We ensured that we paid a 20% tax on an RMD from an inherited IRA at the time of distribution.
We are seeing a penalty/interest charge in the summary. We do not know why we are seeing this charge?
Could it have anything to do with the RMD?
We're stumped!
Please help.
Federal Tax withheld would be in box 4 on the 1099-R. State tax in box 12.
You didn't pay the tax, you had tax withheld, just like W-2 withholding that will be applied now to pay the tax.
You are REPORTING the taxable amount and the amount of tax withheld. If there is a difference between the two you will either owe additional tax or it will be applied to your refund.
The actual tax depends on your other income and margional tax bracket. If not enough tax was withheld, you will owe more.
The box 4 (or box 12 state) withholding will be added to all other withholding, such as W-2 withholding, and be shown on line 16 on the 1040 form to offset your overall tax liability.
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