Where do I show income for an inherited IRA

You will be receiving form 1099-R and it needs to be reported as such; please be sure to enter the form information into Turbo Tax exactly as it appears and answer the follow up questions. The tax treatment of the inherited IRA depends on whether it was inherited from a spouse or a non-spouse.

1.       Federal Taxes

2.       Wages and Income

3.       Select Jump to Full list

4.        Scroll down to Retirement Plans and Social Security

5.       Select IRA, 401(k), Pension Plans (1099-R)

NOTE:  The tax treatment of an inherited IRA depends on whether it was inherited from a spouse or a non-spouse.

1.  Inherited from a spouse.

If you inherited a traditional IRA from your spouse, there are three choices:

1. You can treat it as your Own IRA by designating yourself as the account owner.

2. Treat is as your own by rolling it over into your IRA, or to the extent it is taxable to a qualified employer plan.

3. Treat yourself as a beneficiary rather than treating the IRA as your own. 

You will be considered to have chosen to treat the IRA as your own if you made contributions to the inherited IRA (your above the line deduction) or you do not take the RMD -required minimum distribution for a year as a beneficiary of the IRA.

2.  Inherited from a non-spouse.

If you inherited the IRA form a non-spouse, you cannot treat it as your own.  It means you cannot make any contribution, you cannot rollover any amounts into or out of the IRA, other than trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary.  You also must begin receiving distributions from the IRA under the rules for distributions that apply to beneficiaries.

If you received a distribution from an inherited IRA, it is added to your income and taxed accordingly. You will be receiving a Form 1099-R indicating your distribution as a “death distribution” – code 4 in box 7 will be applied.

Please enter this form in the Wages and Income section, as you will be asked additional questions about the decedent. For example, if the decedent made any nondeductible contributions. Why is this important? Well, nondeductible contributions are treated as return of investment and are not taxable; it may be beneficial for you to find out (often your plan administrator, broker or banker has this information or form 8606 from prior years' tax return should indicate that information ).  You will also be asked if the original owner of the IRA passed away after he/she was 70 ½, did he/she take required Minimum Distribution (RMD) in the year of death. Again, your plan administrator should know and you should as well…if the RMD was not taken, a 50% penalty on not distributed amount may be applied.

Sorry.  This was not the question AT ALL.  I spoke to four very nice and completely unhelpful support people and finally figured out a work around for the ACTUAL problem which I had explained to all four.