IRS says we didn't report 1099-R but we DID.

[lefty]

Got 2022 CP2057 letter saying we didn't report $4,108 1099-R with distribution code 8. But I did!

It shows up on 1040 line 1h "Other Earned Income". When I double click that it opens up the Wages, Salaries & Tips Worksheet, and its under I (as in indigo) 1b. At the end of the day it was included in taxable income, but what do we do about the IRS letter?  IRS is asking me to amend the return (why fix what ain't broke?!)   Am I missing something???????

[IRonMaN]

Write a letter to the IRS and tell them it was reported as you noted in your post.

[abctax55]

What you posted shows it was reported as "return of contributions".  I don't use PS, but that generally wouldn't be taxable.  Are you 'sure' that the amount was actually included in taxable income?

F 1099-Rs get reported on line 5a, not as other income.   So it's not in the place the IRS would be expecting it to be reported.

[abctax55]

IF the amount actually was included in taxable income, then just draft a response explaining that fact, and that it just wasn't on the the 'right' line.  I would wait on amending. 

If you have 3rd party authorization, you might be able to call & get it straightened out.

[abctax55]

I just looked up "code 8" and it's 'excess contributions plus earnings/excess deferrals taxable in 2022'.

I don't speak PS, but the line you put it on (return of contributions) doesn't appear to be correct.

[IRonMaN]

I am a little curious how a state refund made it to line 1 of the 1040 though.

[abctax55]

LOL.... and as 'earned' income?

I changed my mind - an amended return is likely needed for maybe more than one reason.

[abctax55]

A L E R T....

That notice you posted should be removed as it shows the SSN.  

[sjrcpa]

Starting with 2022 returns, I think other income is where 1099-R Box 8 goes. They changed a bunch of stuff last year.

Don't understand the state tax refund though either.

[rbynaker]

1) The IRS letter you attached contains two SSNs so you should probably remove that attachment ASAP.  One starts 559 and the other 526.  There aren't names to go with them so at least that's something.

2) Wow, yay, the IRS added a bunch of lines to the 1040 and nobody bothered to tell their computer what to do with them.  I'm guessing this is a corrective distribution of an excess elective deferral.  If so, then it does count as wages and goes on the shiny new line 1h.  Presumably so the IRS can easily find it and match it to the 1099-R.  Or . . . I guess maybe not!

3) I'm not great with the letter numbers.  Is the CP2057 a "soft" letter?  I know the CP2000s have a "response" page you can fill out if you disagree and mail back to them politely telling them to go pound sand (a.k.a. "Please see line 1h of the tax return as originally filed."  You might pull a transcript.  1h was brand new last year so no guarantees that everybody got the programming right, could be that never made it into the IRS system.  If it's there, plain as day, I might include a copy of the transcript in the envelope with the response and tack on "as shown on the attached transcript."  In a perfect world you might get this fixed with a simple phone call to PPS.  I'm not sure that's the world we live in.

I have one of these from last year but it should be coming on a 2023 with a code P.  Guess I'll find out in a couple months how well that went!  Drake software was kind enough to write "EXCESS DEFERRAL" on the dotted line for 1h so maybe that will help (but probably not).

Good luck.  Please report back if/when you get any traction on this.

Rick

[rbynaker]

On a mostly unrelated note.  Why the heck did ProSeries create their own line numbers (line letters?) that don't correspond to the IRS form?  Looks like they get off-kilter with what ProSeries calls "e. Strike Benefit Income" which is the first bullet in the IRS instructions for line 1h.  PS "e" through "i" should actually be "d" through "h".  Then 2 through 8 under "i" have nothing to do with the description of "i" which is Items from Form 1099-R.

To throwback to one of Chuck's favorite quotes:  "Morons.  I've got morons on my team".

[abctax55]

@sjrcpa 

Ah HA .... I actually think I now remember that (I haven't had one in several years).

[abctax55]

ah... Chuck.  May he RIP.   Still can't see a Miata without thinking of him.

[abctax55]

Rick - I find it curious why this (to my knowledge/memory - on this forum or on others) is the first reporting of the IRS not matching these up.  

Is the IRS just now catching up?

[rbynaker]

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@abctax55 wrote:

Rick - I find it curious why this (to my knowledge/memory - on this forum or on others) is the first reporting of the IRS not matching these up.  

Is the IRS just now catching up?

---

This is the first I've heard of it also.  I'm on at least a half-dozen different tax forums.

I'm curious in this case what the transcript says.  I'm wondering if PS thinks this goes on line 1i (which doesn't exist) and didn't properly transmit it to the IRS as a 1h.  We don't have enough information to follow the bouncing ball from a poorly designed internal PS worksheet to "included in gross income."

[lefty]

Its embarrassing, but I couldn't figure out how to do it proper. they filed separately the year before (normally the software transfers all that state refund info but i guess I didn't pick the right file to transfer because all the state refund info was empty)

I knew since one of them itemized the year before it would be taxable income and I just wanted their ass to be covered.

[lefty]

that's the thing, I didnt "put" it anywhere. I just entered the 1099-R on a proseries 1099-R form, then Proseries "put" it where it put it.  I need to be better about checking the software's work.