RJM Posted March 20, 2009 Report Posted March 20, 2009 Every year I fill out an inherited IRA 1099R input screen for a client, mark it as code 4 (death), and mark it as "inherited IRA" in the checkbox. But it never appears as taxable on pg 1 of the 1040. So I just override the line on form 1040. What am I doing wrong? Quote
ljwalters Posted March 20, 2009 Report Posted March 20, 2009 Is this by any chance a roth Ira. Linda and buddy Quote
kcjenkins Posted March 20, 2009 Report Posted March 20, 2009 Do you put the taxable amount in box 2? Quote
RJM Posted March 20, 2009 Author Report Posted March 20, 2009 I just noticed that if I check the "Inherited IRA" checkbox on the 1099-R, but NOT the "IRA/SEP" checkbox, the distribution does appear as taxable on pg 1 of 1040, but in the wrong line. It appears in the Pensions and Annuities line, not the IRA line. Anyone think this is how it is supposed to appear? I always assumed it should be appearing on the IRA line just above the Pension line. Quote
RJM Posted March 20, 2009 Author Report Posted March 20, 2009 This happens every year.. I think it is safe to assume the program is just sending the amount to the wrong line on pg 1 of 1040. It's one line below where it should be, and very easy to miss when reviewing the return..... Gotta get back to return prep now, but will check in later if anyone has another idea. Thanks ! Quote
kcjenkins Posted March 20, 2009 Report Posted March 20, 2009 Actually, I believe the program is putting it where the IRS wants it. I don't really understand why, but I've never bothered to move it, and never had any problem with it. I try not to expect logic or consistency from the IRS, it's less stressful that way. Quote
RJM Posted March 20, 2009 Author Report Posted March 20, 2009 Thanks for the update KC... I will remove the override. Have a great weekend! Quote
kcjenkins Posted March 21, 2009 Report Posted March 21, 2009 Don't I wish! Will be working all weekend, trying to catch up. Yeah, right, like that is going to happen. But maybe at least I can keep from getting any further behind, I hope. I should not even be here, so I'm going back to work......... Quote
joanmcq Posted March 22, 2009 Report Posted March 22, 2009 That's funny, because I have an inherited IRA and it always shows up taxable on the IRA line. Do they have an 8606 in the return? I put in amount in box 1, taxable in box 2 and check IRA/SEP/SIMPLE box and Inherited IRA box. Shows up on line 15b since for me, taxable is same as gross. And I just opened my return and looked at it and it is there on line 15. Quote
mcb39 Posted March 23, 2009 Report Posted March 23, 2009 I had a client this year who had six inherited IRAs from his brother. They all went to line 15b as taxable with no penalty. I just checked the return. Each one had to be entered separately. Just looked at the 1099s and they all say "Taxable Amount Not Determined." They are coded 4 with the IRA box checked. Quote
RJM Posted March 23, 2009 Author Report Posted March 23, 2009 Thanks Joan and Marilyn... Now you got me curious. Will fool around with it some more and try to see why it is not flowing the way I expect. Maybe I am missing something. Will let you know later... Quote
RJM Posted March 23, 2009 Author Report Posted March 23, 2009 Hi all.. after fooling around with various possible entries on the 1099-R for inherited IRA, and with the form 8606, I am convinced that the program never considered a situation like this taxpayer's, namely: every year an inherited IRA distribution (IRA with 0 basis), and every year a non-deductible IRA contribution reported on form 8606. The program is trying to combine the IRA's, unaware that the basis of inherited IRAs must be kept separate from all basis calc's on regular IRAs. This particular year, taxpayer also has a large rollover to report on 16a of 1040, so I decided not to use KC's method, because it adds the inherited IRA distribution on line 16 and is more difficult for the taxpayer to trace his transactions when reviewing his return. So I will go back to the old method of just entering an override on line 15b. At some point the inherited IRA transactions will become more commonplace, and then I would hope this to be programmed correctly. After thinking about it, there are so many different possibilities for the inherited/regular contribution/distribution transactions, that the programming would be really messy. I would think that prosystems fx or ultra tax would handle this, but not the lower-cost programs like ATX. But I still like ATX better...... Quote
joanmcq Posted March 23, 2009 Report Posted March 23, 2009 I was unaware that basis tracking from inherited IRAs was kept separate from the rest of your traditional IRAs. Of course that could be why they ask you if it is inherited. You might want to check the 8606s and make sure the basis hasn't been subtracted each year. Quote
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