How to enter repaid RMD payments into an IRA per Cares Act in ProSeries

[Steve W 19]

Client took RMD early in the year. Later repaid a portion into his IRA per Cares Act. How do I enter the amount repaid in proseries? 1099-R shows full amount as taxable in boxes 1 and 2a. Need to know how to enter in ProSeries

[Just-Lisa-Now-]

scroll down the 1099R worksheet to the rollover section.

[Steve W 19]

Tried that. There actually were distributions from two different IRAs that were partially rolled back. When entered in the rollover section of the 1099-R screen for each of the IRA's 1099-Rs only one of them shows the amount NOT rolled over (taxable) on the return - the first one entered shows but the second one does not.

[qbteachmt]

"When entered in the rollover section of the 1099-R screen for each of the IRA's 1099-Rs only one of them shows the amount NOT rolled over (taxable) on the return - the first one entered shows but the second one does not."

It's time to include more Details.

Example: An RMD typically has tax withheld. Did your client repay the gross amount by making up the missing Tax withholding, so that the rollover was in fact a Complete rollover of the RMD? And was that made by end of Aug?

Was the Second distribution from Trad IRA? Did it have withholding? Was it rolled over in the timeframe, and in full? Direct indirect?

See how all of that matters?

[Steve W 19]

Thanks for the reply. I do know what I want the 1040 to show. Client has two IRAs, an inherited IRA and a Traditional IRA. The Traditional IRA has a small amount of basis in it from non-deductible contributions. Box 4a of the 1040 should show the total amounts reported from both IRAs in Box 1 of the 1099-Rs.  Box 4b of the 1040 should show the taxable portion of each IRA that was NOT rolled over. Adjacent to Box 4b should be the word "Rollover".

In ProSeries when I enter the amounts on the 1099-R worksheets - the full amounts in Box 1 - Gross Distribution, and then enter the amounts rolled over in Box B2 of the Rollover section of the 1099-R worksheet, only the amounts not rolled over from the first IRA entered show up in Form 1040 Box 4b.  The amounts not rolled over from the second IRA's 1099-R do not show up in 4b. Box 4a does correctly show the correct Gross Distributions from both IRA 1099-Rs. 

I think this is a ProSeries data entry processing problem. I have tried it several ways - entering the correct taxable amounts in Box 2a of the IRA worksheet, leaving it empty, checking and unchecking Box 2b (Taxable amount not determined) etc. 

What I need is a work around that will print the correct amounts (from both IRAs) on the 1040 in Boxes 4a and 4b as well as printing "Rollover" adjacent to 4b 

Thanks for any help you can provide. 

[qbteachmt]

"I do know what I want the 1040 to show."

Okay; remember that we cannot see any paperwork. You have two complex conditions, so if you want us to follow along, separate and specific details help.

"Client has two IRAs, an inherited IRA and a Traditional IRA..."

Okay, but what about this part? "There actually were distributions from two different IRAs that were partially rolled back." When you use the phrase "the first IRA" we can't really follow that part.

On the forum, back in Feb, people were commenting the the combination with non-spousal inherited IRA was creating an error in the combined computation, which I think happened also only with Basis. You describe this exact combination.

"only the amounts not rolled over from the first IRA entered show up in Form 1040 Box 4b. The amounts not rolled over from the second IRA's 1099-R do not show up in 4b. Box 4a does correctly show the correct Gross Distributions from both IRA 1099-Rs."

"I think this is a ProSeries data entry processing problem. I have tried it several ways - entering the correct taxable amounts in Box 2a of the IRA worksheet, leaving it empty, checking and unchecking Box 2b (Taxable amount not determined) etc"

Make sure to enter each 1099-R separately and as provided, and scroll down on the 1099-R Wks to the inherited IRA section and check the box for one inherited as from someone other than spouse.

"What I need is a work around that will print the correct amounts (from both IRAs) on the 1040 in Boxes 4a and 4b as well as printing "Rollover" adjacent to 4b

Thanks for any help you can provide."

I see where someone tried separate form 8606.

[Steve W 19]

I understand the questions in your reply. Let me try to lay it out in a little more detail.

Client has two IRAs

IRA #1 is an inherited IRA (code 4) from which RMDs have been taken for several years

IRA #2 is a Traditional IRA (code 7) from which RMDs have been taken for the last few years. IRA#2 has some basis in it from Non-deductible contributions.

Early in 2020, client took distributions from both IRAs. Later in the year, per the CARES Act, he rolled an amount back into each IRA. The amount rolled back into each was less than the initial distribution from each. 

Custodian issued 1099-Rs for both IRA#1 and IRA #2.

IRA#1 is checked as an Inherited IRA on the 1099-R worksheet and the taxable amount (amount not rolled over) is entered in box 2a. The amount Rolled over is entered in B2 on the Rollover section of the 1099-R Worksheet

IRA#2 - the traditional IRA that has some basis, has been entered several ways on the 1099-R Worksheet. (a.) Taxable portion (amount not rolled over) in box 2a and the amount rolled over in box B2; (b.) Box 2a left blank and the amount rolled over in box B2. (c.) Amount taxable in box 2a and box B2 left blank.

In all cases the amount that is listed in 2a for IRA#1 (inherited) shows in box 4b of the Form 1040.  Nothing from IRA#2 shows in box 4b of the Form 1040 for any of the IRA#2 1099-R worksheet entries.

Hope this makes the fact pattern a little clearer. From your reply it sounds like there was a Forum in February that identified a similar problem.

What I need now is the work around to make the correct values show up on the Form 1040 for box 4b. What was the solution in February?

[qbteachmt]

@Just-Lisa-Now- 

Do you know if the PTB ever addressed the Non-spousal inherited IRA RMD with basis in combination with regular RMD being a computation problem?

[Steve W 19]

Has anybody figured out the workaround to this IRA rollover issue? I know it is our busiest time of the year but I'm still "hanging" for how to solve what I believe is a software data entry problem. qbteachmt was helping but he has since disappeared  

[Just-Lisa-Now-]

I havent seen anything about it mentioned anywhere

@IntuitAustin is this being talked about at all?  1099R with Code 4 is using IRA basis to reduce taxable amount.

[qbteachmt]

I haven't disappeared. The callout to an Intuit person is about all your peer users can do.

[Steve W 19]

Thanks for your help - I do appreciate it - what kind of reply from an Intuit person can I anticipate?

[qbteachmt]

"what kind of reply from an Intuit person can I anticipate?"

We don't know that there will be a reply. We're peer users.

You might be getting email notifications from the forum platform that your topic has updates. It is not Personal Replies. It's housekeeping.

It would be nice if Intuit notices we mentioned this same issue was revealed at the very beginning of the release of the 2020 package, and doesn't seem to have made it into an update, of course  🙂

[taxiowa]

What I did in similar situation is override the % on line 10 of part I of form 8606.  You have to do this every year an amount is taken out of an inherited IRA, when client has basis in traditional IRA.  I file these returns by themselves because you have to turn error checking off e-file because of the override.

It sounds like you know the amount desired on 1040, line 4b so just keep track of calculations in case ever questions.  The % override has to be calculated based on existing traditional IRA 1/01 balances only.  But the software wants to take the non-deductible amount against all IRA distributions.  This also results in the correct carryover of non-deductible basis to next year with only one over-ride.

[FrankD1]

on line 4 of Form 1040 use the explanation block to state that there is x amount of income from IRA distribution that your software won't record on line 4b. Refer to Schedule 1, Part 1, Line 8 "other income" to show that amount as taxable, with reference back to Form 1040, line 4b. Did this for a client with a normal distribution (code 7) from a Traditional IRA that registered on line 4a (Gross Amount) but showed nothing as taxable on line 4b. Don't know what IRS reaction will be.