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Income tax withholdings by Schwab are imported incorrectly

billflyer

I have authorized Schwab to transfer my monthly IRA RMD to my Discover savings account. Schwab does this with 3 withdrawal transactions: two are labeled “Tax Withholding” (for Federal and State taxes), and one is labeled “MoneyLink Transfer” (for the net amount to me). This is correct. But Quicken is importing all three of these into its IRA account as “WithdrawX” – transfer to savings. As a result, my savings account is overstated and my tax withholdings net to zero and I have to make manual adjustments to both accounts to correct them. Is there a way for me to fix this, or is this a Quicken interface problem?

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Tom Young

By default any money coming out of a tax deferred Account in Quicken is listed as a WithdrawX as, generally, any money coming out of the Account is taxable income. Also by default any "tax" entries made in the tax deferred Accounts (if you can even make them) are ignored in Quicken's tax reports.

One approach here, assuming the monthly amounts are always the same, would be to create a Reminder posted in the savings Account as of the transfer date for the gross distribution split into its component parts. Then delete the 3 withdrawals (checking to make sure that they add up to the correct gross) and manually clear the Reminder's transaction in the IRA.

billflyer

Thank you. I'm not familiar with reminders, but I'll look into that. It sounds like just as much manual work as I'm doing now: In the Quicken IRA account, I change the net-to-me amount to the gross withdrawal and delete the two tax entries. In the Savings account, I split the Category into net, Federal tax and State tax.

Jim_Harman

One advantage of a Reminder is that you set it up once and you just accept it each month.

Here is a "Cheat sheet" for entering distributions from IRAs and other tax deferred accounts.

In the IRA, click on the gear at the top right and select Edit account details. Click on Tax Schedule and set Transfers out to 1099R: Total IRA taxable distrib., like this:

For the taxes to be recorded properly in Quicken, the transfer must be entered as a Deposit transaction in the receiving account. It can be a banking or an investing account, but it must be a taxable account, not another IRA for example. If there is already an Xout transaction in the IRA account that transfers money to the taxable account, note the amount and delete it before entering the Deposit. Do not try to edit the receiving end of the transfer.

In the receiving account:

1) Enter a Deposit transaction for the net amount of the RMD...a positive number.

2) Split the category:

Line 1 of the split: Category = the IRA account name in [square brackets] and the gross distribution amount...a positive number.
Line 2 of the split: Category = the Fed taxes withholding category that you use...a negative number.
Line 3 of the split: Category = the State taxes category that you use...a negative number.
Total of the split: Must equal the net amount of the deposit.

If you receive the distributions regularly, you can set this transaction up as an Income Reminder.

In the IRA account: Delete any downloaded brokerage transactions for

The net distribution
The Fed taxes withheld
The State taxes withheld

With this setup, the taxable income will be shown in the “1099-R Total IRA Taxable distrib.” and the tax withholding in the withholding sections of the Tax Schedule report.

billflyer

Thank you. I will look into using Reminders