New Category - Tax set to 1099R Taxable Pension - Does not show up as Taxable Income

Steve54@ Member ✭✭✭
I created a new Income category to account for a taxable distribution from my 401(k) and set Tax Reporting to the Tax related category: Standard line item list: Tax line item for this category to 1099-R:Total Pension taxable dist. See the attached screenshot.

In the 401(k) account I used Withdraw as the Action to withdraw the cash value of the RMD. The Payee is set to my name and in Split used my new category for the Taxable amount and entered the amounts withheld for Fed and State Tax. Easy-peasy. Huh!

Silly me I thought it would show up in the tax planner as taxable income. It does not. I ran a report that showed 1099R income and it does not show there. I am missing the point of using tax categories if setting something as a "taxable dist." does not show in the tax planner as Taxable Income.

Please explain why this does not work.



  • Sherlock
    Sherlock Member ✭✭✭✭
    edited December 2021
    Your approach does not work because the 401(k) account is tax deferred, a category withdrawal would not be seen as positive income, and you would have to play some games in the split to fake the taxable total.  Instead,  I suggest you enter the split transaction in an account that is not taxed deferred and associate the tax line item on the transfer from the 401(k) account.  The tax line item association may achieved by selecting the tax line item in the 401(k) account's Transfer out: pull-down menu on the Tax Schedule Information window: open the account, press Ctrl + Shift + E, and select Tax Schedule.
  • garysmith87
    garysmith87 Member ✭✭✭✭
    Please see this thread.  It's for an IRA, but the concept is the same for a 401K.

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