Properly Record Federal Tax Withheld From Mutual Fund IRA Distribution

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Robert Kassnel
Robert Kassnel Member ✭✭✭
edited February 2023 in Investing (Windows)
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.

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  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
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    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 ✭✭✭✭✭
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    @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.

    (Quicken Classic Premier Subscription: R55.15 on Windows 11)

  • Robert Kassnel
    Robert Kassnel Member ✭✭✭
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    Thank you both. I did cast my vote for Product Idea.
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