Tax Planner doesn't pick up tax withholding for IRA withdrawals

tilklem

The Tax Planner overstates my income tax due because it doesn't recognize the withholding taken with every IRA and 401(k) withdrawal. How can I correct this?

Tom Young

The best way to make this work as you'd expect it to work is to originate the distribution in the receiving Account.  Enter the net deposit in the register then split that transaction.  The first line of the split records the GROSS distribution to whatever Category you're using with a Tax Line Item of 1099-R:Total IRA taxable distrib.   Then enter the withholding as a negative number, bringing the total for the transaction back to the net amount entered in the register.  This Category would have the appropriate "federal taxes withheld" Tax Line assigned to it.

Tom Young

"Do I just delete the downloaded entries in the IRA account? "

That's what I'd do.  I don't use the Tax Planner but the Tax Planner should not be looking "inside" Accounts marked as retirement accounts since transactions inside the accounts are a "black box" for tax purposes. 

Tom Young

The best way to make this work as you'd expect it to work is to originate the distribution in the receiving Account.  Enter the net deposit in the register then split that transaction.  The first line of the split records the GROSS distribution to whatever Category you're using with a Tax Line Item of 1099-R:Total IRA taxable distrib.   Then enter the withholding as a negative number, bringing the total for the transaction back to the net amount entered in the register.  This Category would have the appropriate "federal taxes withheld" Tax Line assigned to it.

tilklem

That should work for the tax planner and the receiving savings account, but what happens when I download from my IRA? Doesn't that enter the transaction into the record twice? Do I just delete the downloaded entries in the IRA account?

Tom Young

"Do I just delete the downloaded entries in the IRA account? "

That's what I'd do.  I don't use the Tax Planner but the Tax Planner should not be looking "inside" Accounts marked as retirement accounts since transactions inside the accounts are a "black box" for tax purposes. 

tilklem

I just made the changes to my withdrawal for this year and it worked. Still trying to figure out how to adjust the Tax Planner given that I'm retired and don't have a W2. Figuring out withholding during retirement is a pain anyway. Thanks so much for your help, Tom.

markus1957

If your IRA withdrawals are periodically made for the same amount you can use a Scheduled Income Reminder with the splits in the receiving account. Then it will project both the income from IRA withdrawals and tax withholding for future in the tax planner module.  If you enter the reminder manually or automatically, the downloaded transaction from the IRA will be matched to the entered reminder transaction rather than having to delete it.

How you configure the reminder may have to be modified if you have the tax withheld by account manager and sent directly to the IRS versus paying it yourself. 

A long standing bug in Quicken Reminders that does not honor the tax line designation for transfers in a tax-deferred account complicates how you have to set up the reminders.  How the account manager sends the transactions to Quicken also makes a difference.  If you provide details on how your account manager handles the withdrawal/tax payment at the transaction level, we might be able to help with configuring reminders to accurately project the event in the tax planner.