Properly Record Federal Tax Withheld From Mutual Fund IRA Distribution

I am selling some IRA mutual fund shares and having federal taxes withheld. Two transactions are downloaded each representing shares sold. I easily figure out how to get the net proceeds posted into my bank account, but I have no idea how to record the federal tax into my Tax: Fed category and thereby get it out of the Cash Balance for the mutual fund. Can someone help with a step-by-step process that begins with how to correctly edit (if necessary) the downloaded transaction that represents the shares sold for purposes of federal taxes? Thanks.

Comments

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Delete the cash entries in the IRA.  Over in the checking Account split the net deposit.  In the first split line gross up the the amount to the pre-tax number and record that line as a transfer out of the IRA.  Then in the second line record the tax amount as a negative number, with the Fed tax Category.  That will leave the net deposit unchanged, the cash will be zeroed out in the IRA.
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    @Robert Kassnel - As you've noticed, Quicken does not manage retirement account distributions properly.  There is a Product Idea requesting that this be improved upon:  Improve handling of IRA distributions, including QCDs and Roth conversions.  If you like the idea, please be sure to vote for it.
    There are a couple of workarounds to get Quicken to properly capture the gross distribution amount, the net distribution amount and the taxes withheld amount.  The one mentioned by @Tom Young is considered by many to be a best practice and one which I use.  It works really well in getting the data captured properly in the Tax Reports and in Tax Planner.
    Let us know if you have any questions about it.
    (QW Premier Subscription: R44.20 on Windows 11)
  • Robert Kassnel
    Robert Kassnel Member ✭✭✭
    Thank you both. I did cast my vote for Product Idea.