What Tax Schedule option should I use for RMD's from IRA to Checking Acount

bluzchaser

When I xfer my monthly (12 mo's yearly) RMD distributions to my checking account, I need to assign those transfers as 1099-R transfers. But which 1099-R should I use? I seem to have two options; 1099-R: Total IRA taxable distrb or, 1099-R: Total IRA gross distrb. What's the difference?

Bob_L

I believe the 1099 may have both of those lines, but as long as it is just a regular RMD, I would use the taxable one.  BTW, be sure to create the transfer in the destination account as a deposit with the transfer as the source (as opposed to creating it as a transfer out in the IRA).

Tom Young

@Bob_L

"BTW, be sure to create the transfer in the destination account as a deposit with the transfer as the source (as opposed to creating it as a transfer out in the IRA)."

Between my wife and I we have only one IRA that requires a minimum distribution - an inherited IRA acquired several years ago.  I set the transfer out of the IRA as a 1099-R event and always create the transfer in the IRA itself, and this has worked fine. 

Has their been a change somewhere along the line that prompts this recommendation?

markus1957

Check the "Tax Schedule" button in the IRA account details window; it may already be selected to assign transfers to a taxable distribution. If not, you can do it there. In any case, do not do both as you will get a double taxable entry.

If you set up a reminder to track taxes in Tax Planner, configure the reminder transaction as suggested by @Bob_L .

markus1957

@bluzchaser said- Not sure why the adjacent 1099-R: Total IRA gross distrb. is available as another choice as that is also a taxable option no matter if it is designated as "gross distrb." 

The reason is that only the "1099-R Total IRA taxable distrb" shows up in the Quicken Tax Planner module as taxable income.  With the introduction of Roth IRAs, those distributions are not taxable and thus, distributions from Roth IRAs need a tax line that will not trigger taxable income.

Bob_L

I believe the 1099 may have both of those lines, but as long as it is just a regular RMD, I would use the taxable one.  BTW, be sure to create the transfer in the destination account as a deposit with the transfer as the source (as opposed to creating it as a transfer out in the IRA).

Tom Young

@Bob_L

"BTW, be sure to create the transfer in the destination account as a deposit with the transfer as the source (as opposed to creating it as a transfer out in the IRA)."

Between my wife and I we have only one IRA that requires a minimum distribution - an inherited IRA acquired several years ago.  I set the transfer out of the IRA as a 1099-R event and always create the transfer in the IRA itself, and this has worked fine. 

Has their been a change somewhere along the line that prompts this recommendation?

markus1957

Check the "Tax Schedule" button in the IRA account details window; it may already be selected to assign transfers to a taxable distribution. If not, you can do it there. In any case, do not do both as you will get a double taxable entry.

If you set up a reminder to track taxes in Tax Planner, configure the reminder transaction as suggested by @Bob_L .

Bob_L

@Tom Young I have not checked it recently, but historically there has been a problem with some of the tax reports and/or planner not picking it up correctly.  Do you find your method works correctly on all the reports and the planner?

bluzchaser

Thanks Bob L, Tom Young and markus1957. I read each comments/suggestions and used the 1099-R Total IRA taxable distrb option rather than the adjacent 1099-R: Total IRA gross distrb selection. I also added the 1099-R Total IRA taxable distrb in the destination account (transfer in) and the 1099-R Total IRA taxable distrb in the source account (IRA) transfer out. Not sure why the adjacent 1099-R: Total IRA gross distrb. is available as another choice as that is also a taxable option no matter if it is designated as "gross distrb."
Thanks.

markus1957

@bluzchaser said- Not sure why the adjacent 1099-R: Total IRA gross distrb. is available as another choice as that is also a taxable option no matter if it is designated as "gross distrb." 

The reason is that only the "1099-R Total IRA taxable distrb" shows up in the Quicken Tax Planner module as taxable income.  With the introduction of Roth IRAs, those distributions are not taxable and thus, distributions from Roth IRAs need a tax line that will not trigger taxable income.

bluzchaser

Thanks markus1957 for clearing up the usage of that alternative option. It would really make more sense if the 1099-R Total IRA GROSS DISTRB (meant for Roth IRA), would be changed someway to indicate that option is for ROTH IRA'S, Maybe as 1099-R Total Roth IRA gross distrb? Or some other designation so as to indicate only use for Roth IRA's. and not regular IRA'S.

NotACPA

Q is using the IRS's terminology.  Complain  to the IRS.

Other's would post complaints here if Q DIDN'T use IRS terminology.

Tom Young

@Bob_L

The method I've used has always worked properly for me.  The item shows up on the tax report and the income also shows up correctly on a budget report.  I haven't investigated beyond that.