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Solved

Under the CARES ACT, I returned my RMD in my IRA , technically a 2020 Rollover. But Turbo Tax is not allowing me to report the Federal Income tax withheld in Box 4 1099

Forum|Forum|5 years ago
January 1, 2021
8 replies
0 views

I am getting an ! mark under the money i reported in Box 4, and i am unable to continue my return due to the following quote from Turbo Tax " Federal tax shouldn't be greater an gross distribution in Box1" . So how can i proceed with my return?

TurboTax Deluxe Online

Best answer by AmyC

So, how do you report return of an RMD using TurboTax?

@sandyjo304033

@rebroach

Follow these steps to report RMD returned:

First, report the distribution:

Go to your 1099-R and edit
Type in the 1099-R just like the form in your hand
Gross distribution, taxable amount, tax withheld, etc, match the form
Box 7 has a number in it on your form, pick that same number for the program dropdown.
If your form has IRA/SEP/ SIMPLE box marked, check the box in the program
State information, match the form
Continue

Second, go through the follow up questions:

Inherit, no, continue
Transfer to charity, none, continue
What did you do with the money? Moved to another retirement account or returned to same account, drop down appears
1. choose which of the following applies
  - moved it all - says rolled over all of this money to another retirement account
    - continue
    - We want to let you know no tax
  - moved part of it - did a combination of rolling, converting, or cashing
    1. dropdown and mark how much was rolled back into retirement account
    2. continue
    3. HSA? no continue
    4. COVID or disaster?
      1. no, continue, done
      2. yes, COVID, keep answering

dmertz

Employee

The amount in boxes 1 and 2a of the code 7 2020 Form 1099-R must be the amount that you originally took out of the IRA, including the tax withholding, not some lower amount. They must not have any other value. Some or all of the distribution is made nontaxable by how you report it on your tax return, not by how it is reported on the Form 1099-R. To make the distribution entirely nontaxable you would have had to have substituted other funds for the amount withheld for taxes.

jwdbond

Employee

This is correct interpretation of the IRS rules, but Turbotax (Mac addition) still shows the amount of the RMD rollover as income. I just entered my 1099-R into Turbotax and now it shows I owe income tax on it. Is this a bug in the software or am I not checking the correct boxes? I tried both ways, calling it a RMD or not an RMD. I added back the amount for tax withholding of my own funds.

macuser_22

Employee

@jwdbond wrote:

This is correct interpretation of the IRS rules, but Turbotax (Mac addition) still shows the amount of the RMD rollover as income. I just entered my 1099-R into Turbotax and now it shows I owe income tax on it. Is this a bug in the software or am I not checking the correct boxes? I tried both ways, calling it a RMD or not an RMD. I added back the amount for tax withholding of my own funds.

For a simple return of a RMD do not say that is was a RMD because the 2020 RMD did not exist. NO 2020 distribution was a RMD.

The CARES act provisions fir the 3 year return of distributions, and the 8915-E form that reports them, has not yet be added to the TurboTax interview because as of now the new 891E for does not yet exist (it only exists in the DRAFT state at the IRS). Until the IRS finishes and publishes the final form and releases the electronic file specifications for that form, TurboTax (and users) can only wait. As of now, there is not even any estimated release date.

You can view the draft form here:

https://www.irs.gov/pub/irs-dft/f8915e--dft.pdf

https://www.irs.gov/pub/irs-dft/i8915e--dft.pdf

Subject to change of course since it is a draft.

(Historical fact - 2-3 years ago a late tax law that changed forms delayed the form release until May - June after the filing date- which caused many affected taxpayers to have to file extensions that gave them until Oct 15 to file.)

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

macuser_22

Employee

Most financial institutions will not send 1099-R forms until the end of January 2021 - you should wait for it before entering anything. If returned after 60 days of the distribution under the CARES act, it will also go on a new 8915-E form that is still under development by the IRS and not available in TurboTax yet.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

dmertz

Employee

macuser22 meant to say Form 8915-E.

If this distribution occurred before July 2, 2020, the regular rollover deadline was extended beyond 60 days to August 31, 2020 without it being a Coronavirus-Related Distribution that would otherwise have to be reported on Form 8915-E to be eligible to be able to roll it over beyond the 60-day deadline.

fanfare

Employee

TurboTax will allow you to report the Federal Income tax withheld in Box 4, as a distribution not rolled over.

JamesSutton

Or on Sch. 1, line 8, sub line 22, enter as negative amount the amount of RMD that you recharacterized in 2020 pursuant to CARES Act. This will let you get your correct tax liability. Don't know if this would work for filing purposes, though there's a tab to enter an explanatory statement. If you had taxes withheld and recharacterized the whole RMD including taxes on your RMD, you made a contribution to your IRA, which is a no-no if you're a senior & complicates your return if you aren't or if you made maximum contribution for 2020. No idea how to account for this.

LeeB2

Check the earlier reply post by dmertz. His procedure solved my issue, and my line 4b was corrected. Thx.

chiefhosa

how do I report the return of my 2020 rmd in turbo tax

MrMike53

I am not in front of my computer but you must first enter your 1099-R. It should have boxes 1, 2a and 7 filled in. If you paid taxes they should also be filled in. I also assume box 7 is listed as “7” for normal distribution.

I (actual my parents) paid their RMD back including all taxes last year. As You go through the income section of Turbo Tax you come to withdrawals from your IRA. You go through this section just as if you took the RMD. At one point it asks: Did you take an RMD ... at this point you answer NO !

it is counter intuitive as there are other questions that ask about the cares act. But when I did this - it finally handled it correctly and listed the money I put back as a Roll Over.

Let me know if you are still having an issue and I will re-answer with my computer opened and list every step and answer.

Hope this helps.

goatsnvairs

I re-entered my 1099R and marked it as not an RMD. I am not getting questioned whether it was rolled over by TurboTax. When I review and wrap everything up it is still showing as taxable in 4b. What am I doing wrong?

dmertz

Employee

goatsnvairs, what is the code in box 7 of the Form 1099-R provided by the payer?

Is the IRA/SEP/SIMPLE box marked?

goatsnvairs

The code is 4, the box is checked. Thats how I entered it too.

rstupp

Under the CARES ACT, I returned 100% the RMD back to my IRA, even though 10% was deducted for Federal taxes. Turbo Tax is showing the Tax amount as Income as well as withholding tax. Since I paid it all back, there should be -0- Income. It's as though, I never made any RMD but prepaid an amount for taxes. There should not be any income. Also, do I need to wait for the Form 5498 before I can file my taxes?

macuser_22

Employee

Delete the 1099-R you entered and re-enter.

Answer the RMD question that "None of this distribution was a RMD" or "RMD not required" depending on the TurboTax version - because it was NOT a RMD, there were no 2020 RMD's.

If this is an inherited IRA then answer the "Is this IRA inherited" with NO. The purpose of that question is to PREVENT rolling an inherited IRA over, but is allowed for 2020 only.

Then you will get the screen to say it was "moved" and all rolled over.

Also check the box that this was NOT a COVID related distributions - it was a RMD that was returned.

That will put the 1099-R box 1 amount on the 1040 form line 4a with the word ROLLOVER next to it.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

HTL2

How do I enter my RMD rollovers in turbotax?

macuser_22

Employee

@HTL2 wrote:

How do I enter my RMD rollovers in turbotax?

Did you READ the answer directly above your post?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

jjasinski

I have tried to follow the directions for reporting a return of my 2020 RMD but without success.

I am using the downloaded version of Turbotax 2020. Please advise in a set of steps how I report the return to my IRA the 2020 RMD and where that change is reflected.