![]() ![]() (RMDs cannot normally be rolled over.) According to Filomeno, Sandy would write “Rollover” in the space to the left of line 4b. 31, 2020, pursuant to special 2020 rollover rules. Sandy’s Form 1040 would reflect a taxable amount of zero on Line 4b since she rolled over the RMD before Aug. In this illustration, with no other distributions other than the one $75,000 RMD taken in January and rolled over in July, Sandy’s accountant would not use the $75,000 figure reported on Form 1040, since that figure does not reflect the $75,000 rollover that occurred later in time. He or she would advise how to handle your specific situation. That’s the point to call your accountant. Sandy’s 1099-R also reported a figure for box 2a (taxable amount), which also shows $75,000. That’s the locus of the taxpayer’s confusion: “How can the $75,000 be taxable if I rolled it over in time?” Time to Call Your Accountant That’s the figure she will use to carry over to her Form 1040 (line 4a) as her distribution. Let’s assume a person we’ll call “Sandy” took her RMD of $75,000 from her IRA in January of 2020 the Form 1099-R she just received from her IRA custodian reported $75,000 in box 1 (gross distribution). IRS Notice 2020-51 extended the 60-day period to Aug. Due to the timing of the CARES Act’s waiver of 2020 RMDs, early bird RMD-ers would have been unable to undo their 2020 RMDs without relief. Normally, a rollover has to take place within a 60-day window. The second part is the rollover, which calls for a contribution report on Form 5498 (in this case, the RMD rollover). I think it helps to think of the 1099-R as reflecting the first step of the process, the distribution (in this case, the 2020 RMD). But, even though the form may indicate a taxable amount in box 2a, that doesn’t necessarily mean that it is taxable for a very good reason: recipients of the distribution have the option to roll it over to an IRA. Form 1099-R indicates that the taxpayer received a distribution. Not All 1099-R’s Lead To Taxesįilomeno pointed out that while the receipt of a 1099-R usually indicates taxable income, it doesn’t always. Always consult with your own tax adviser before taking any actions. I asked CPA Thomas Filomeno, a partner in Marcum LLP’s Hartford, Connecticut, office, to share some additional insights, with the caveat that tax returns are specific to individual taxpayers. Marcum is a national accounting and advisory firm. No matter which way you go, keep Form 5498 with your tax records. Form 5498, which reports contributions, will be issued by your IRA custodian later in the year, before May 31, which is the form issuer’s deadline. If your tax return is on extension, you’ll provide the accountant IRS Form 5498. Also provide your IRA statement showing the redeposited RMD. If you do your taxes with an accountant, you’ll be providing him or her your Form 1099-R, but that’s only part of the story.
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