"they rolled over the Traditional IRA back to the Roth IRA" That's a conversion. That's not a new contribution. It would be pro rata taxable based on all of their Trad IRA, SEP IRA and SIMPLE IRA basis to FMV, as well. It's like doing a late backdoor Roth.

The IRS knows: https://apps.irs.gov/app/eitc https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant Yes, things changed. There was an act of Congress (ARPA) and there was a tax court ruling, as I recall.

There is already your topic running here on the same issue: https://accountants.intuit.com/community/proseries-tax-discussions/discussion/fast-path-validation-check/00/299179 No need to ask again as separate topics. Thanks.

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Their own contributions are Basis; that gets entered on Form 8606. You didn't state if they took more than this amount. Roth has distribution ordering rules. Also, there are three different 5-year rules (account of this type open at least 5 years, conversions left in at least 5 years) and there is code J for early distribution = under age 59 1/2. That means Form 5329 for penalties. There are some exceptions. https://www.irs.gov/taxtopics/tc557  

"My question is, can this customer gift himself and his spouse 17k from Mom, or is it better to claim these dollars as income?" With a full powers POA, he can just take it all. But, the gift limit (to each) is not going to cover "take 1k/week" and they are losing out on Social Security credits, if that matters. So, what about that shortfall? "They want me to do Mom's taxes" You could look into Mom having hired "household help." "She moved into their home full-time last May, so Mom's assets have paid the customer approximately 28k for 2023." And is she a dependent for them, or covering her own costs? She would contribute to the general costs to run the household (utilities, food, etc) and her lodging and personal effects (clothes, etc) as well as any personal direct costs (medical, etc). Are they doing Both? Charging her rent, room and board, personal maintenance, and also "wages?"

"even though there was a trust/will" For future reference: You can't state them like that, as if they are synonyms. Each has different ramifications. There is or isn't a trust. There is or isn't a will. The Trust might be the owner of specific properties and investments, or a will can list that the estate "pours over" to the trust. But separately, third condition = the investment account (and financial institution accounts) might have a designated beneficiary (or POD = pay on death), which might be neither the trust nor going to the estate. A specified account beneficiary overrides the trust and the will, as a direct beneficiary. Just to help understand who's on first, what happened, who was supposed to make it happen, etc. The will might specify two children split the estate. There might be a trust with financial holdings inside of it (checking, money market, CDs), including real estate, all titled to the trust, and naming the next door neighbors on both sides as the only beneficiaries. And the investment account beneficiary might leave that account to the janitor at the school, who isn't even a family member. Which means the estate is Mom's clothes and jewelry and personal effects. And if Mom never told anyone all of this, that's why families get mad.

"So it should qualify as a rollover" Well, then you are back to commingled funds. Either it's not a rollover, but an investment of disbursed funds and the wrong purchase. Or, it is a commingled purchase. I think you should find a mentor that is a trusted licensed insurance broker for investments. Not the taxpayer's friend.

"their notes separated the funds as qualified and non-qualified but when they were given to Company C, they were commingled and all put into the same qualified annuity." Thanks for the review. Once the funds were removed from the IRA, they are just like any other funds your taxpayer can spend. That large distribution event is taxable. Once the funds were removed from the nonqualified plan, which typically is taxed while the taxpayer worked there and had the "rights" to the funds, only earnings would be taxable, when distributed. This is because a nonqualified plan typically is a salary or compensation deferral plan, which is taxed as compensation at the time awarded (think of how a bonus might work) but not given to the employee (so, not yet income). It is not unusual for a nonqualified plan to tax only Medicare and Social Security, then the FIT is part of the disbursement event (when they still work for them). So, once distributed, it's just like any other funds your taxpayer can spend. That partial event is taxable; the other part likely was taxed on a W2 year(s) ago. So, there is no commingle. There is only Taxpayer's own funds. And the sale is the wrong product. The taxpayer is now exposed to double taxation. A non-qualified annuity is purchased with after-tax dollars, so that only the earnings are taxed. A qualified annuity would continue to shelter tax deferred funds. "A qualified annuity is one that has been purchased with pre-tax dollars... Only the earnings of a non-qualified annuity are taxed at the time of withdrawal, not the contributions, as they are after-tax money." https://www.investopedia.com/terms/q/qualified-annuity.asp Don't let the taxpayer work with the same people. They already made a mess.

I read and reread this yesterday, and it made no sense to me, either. This is commingling. This: "On the 1099R she received from the insurance company for the new annuity it has the IRA box checked." That's not what this was. A 1099-R is issued for money Out. The IRA brokerage or other entity holding her Trad IRA account would issue this because there was a distribution or disbursement or transfer from them. This is either a taxable event, or it went to a "like kind" tax deferred qualified account (say, to another Trad IRA) and that avoids being a taxable event. The new annuity, if it also paid out, has its own reporting. Or, the annuity is inside of the IRA? In which case, you still can't commingle. Sales people get it wrong, often, but they legally need to unwind something that is disallowed. Someone needs to lose their insurance sales license, as well.

"put the Roth recharacterized amount in the Traditional IRA contribution field so that it would either be treated as a deduction or an 8606 would be created to show it as a basis in the Traditional IRA." Roth contributions are only after-tax dollars, so it is never possible to treat it as deductible. Yes, it would be basis when recharacterized to Trad IRA. Earnings are always the consideration when this happens, because Roth earnings have not been taxed, and any recharacterization or distribution of excess contribution has to take earnings into consideration.

Enter the 1099-R as you have it. Here is the help article; make sure to expand the sublevels. That includes the Form 8606 (see if your taxpayer included Form 8606 in prior years, for your reference): https://accountants.intuit.com/support/en-us/help-article/retirement-benefits/common-questions-form-1099-r-proconnect-tax/L2ha77K09_US_en_US?uid=luvt8jif "The IRS states the 5 year rule applies from the date of the original owner" Was this account or other Roth IRA open at least 5 years? There are multiple "5-year rules" for Roth. Having any Roth account at all is the one you noted; and another is Distribution of converted amounts. Each conversion has its own separate five-year period. "and it was Converted from a Traditional IRA to a Roth IRA in July 2021" Then if nothing else, there is Basis as of that taxable amount that was converted. Contributions and conversions are basis, because they are post-tax. A beneficiary distribution is an exception to the early withdrawal (before 59 1/2 years old), anyway. Contributions don't have a 5-year rule. "I know it was an inherited Roth" You would need to know which of these options your taxpayer decided to use. Perhaps it is a plain distribution-over-time scheme: https://www.investopedia.com/roth-ira-beneficiary-rules-4770500 "Inherited a Roth" is not the same as "having an inherited Roth." One is a condition; the other is the actual account they opened (if they did this).

"01/03/23 is the date of the (3) bonds that were redeemed. There were (3) bonds redeemed 08/01/22 and (1) bond redeemed on 09/29/21." From TD: "By continuing to hold the bond, you can continue to postpone reporting the bond's accumulated interest for federal income tax purposes until you redeem it, you transfer the bond to another person, or the bond stops earning interest. When EE and I Bonds reach maturity, they are automatically redeemed and the interest earned is reported for federal income tax purposes." If your taxpayer left everything in Dad's name until now (which would be an error), that doesn't relieve him from reporting the interest on those 1099-Int. We know it isn't the dead guy reporting that. "Since the interest was not received until 2023, can I include all the 1099's on the 2023 return." But your due diligence revealed annual earnings. "The son told me he left the funds because he didn’t need them" Now we know more facts. "All  the transactions on Treasury Direct are dated 2023" isn't the case.