Hello Community of Professionals,

One of my customers retired in the year 2019 and cashed our her 401k for 132,000 and received a form 1099 R

We declared it and paid the due taxes about 22,000 in her 2019 return and with the money she opened an IRA with bank of America for 118,000  in the same year Nov 2019.

Then in 2020 she decided to pay her home in full and cashed out the IRA from bank of America that she only open in Nov 2019 and had for only 4 months and paid her mortgage and  now she received a form 1099 R for 118,000 for the year 2020.

If I put it in the declaration it is taxing her again in the 2020 for the 118,000 and now calculating a tax again of about 19,000.

I noticed that the form 1099 R shows taxable amount not determined.

Somehow I feel that she is paying taxes for the same 132,000 twice since it is the same retirement money she keeps flipping.

Can you please offer advice as to what would happen if I put zero on the form 1099 taxable amount for 2020?

She already paid the taxes on the 132000 back in 2019.

Thank you so much for your guidance.

This older lady retiree is worry to death to have to pay again so much in taxes.

Best regards,

Victor Mendoza,

Palm Springs California