Return rejected due to taxable inherited IRA

[hdtaxman]

Curious if anyone else has received this reject issue..I have a traditional non deductible IRA converted to a ROTH (backdoor Roth basically) and getting the above error when efiling..The notice says there is a fix on or after March 5th.

I notice a turbotax forum where this issue is also mentioned but no one seems to know whether it is an IRS reject or a Proseries/Turbotax reject. But the thought is is that it is an Intuit/Turbotax issue which seems it would also be Proseries...the box is specifically checked on the return that it is not an inherited IRA.

Just curious on any insight into the issue.

Thanks in advance.. 

[Just-Lisa-Now-]

Theres an EA here in town that just called me about this, hes getting a similar rejection...its NOT an inherited IRA but its being rejected as one.

Is it bouncing back immediately before it even gets to IRS? or does it get sent to IRS then rejects?

[Just-Lisa-Now-]

OK I just spoke to the guy here in town, hes had a couple of them, his own return included. The full rejection message says that IRS expects this to be fixed by March 5th...so you may want to print the entire rejection report (highlight the file then hit F12 for the rejection reports options)

[hdtaxman]

Thanks for that update..I was just seeing the rejection..I didn't think to do the F12...since an IRS issue, I will quit filing until the 5th! 🙂

Thanks for the update.

[Frustrated-in-IL]

This isn't an IRS issue; it is a ProSeries issue.  The rejection notice does make it sound like it is IRS but this is what is going on.

There is a problem with the calculation of the taxable portion of an IRA when there is also an inherited IRA.  Specifically, the program is including the amount of the inherited IRA distribution on line 7 of Form 8606.  This is causing a larger than allowed basis recovery.  Apparently, ProSeries is holding returns that include Form 8606 until this is fixed.  All my returns with Form 8606 got this rejection and I had no idea until I actually worked on one with an inherited IRA.  It looked funny to me and I compared it with last year and immediately saw the problem.

[hdtaxman]

Thanks for that update..appreciate your diligence..your answer makes sense on tow levels..my returns do not have DCN on them and second, when has the IRS ever been so specific with a date?  🙂  Sounds like Proseries has some work to do and hopefully, they will fix it by March 5 as indicated..

Thanks again.

[Frustrated-in-IL]

Just sent a return that was previously rejected with Form 8606 and it has been accepted by IRS.  Kake sure you update the program before resending.