FORM 1099 R FOR THE SAME MONIES IN TWO DIFFENT YEARS

[palmspringstax]

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

[qbteachmt]

You need to be more specific:

"We declared it and paid the due taxes about 22,000 in her 2019 return"

You filed that the total was taxable? That means there is no more Retirement money. Now it is just investment money.

"and with the money she opened an IRA with bank of America for 118,000 in the same year Nov 2019."

Was that as Roth IRA? Did it meet the rollover timeframe limit? She didn't redeposit the tax difference, so that is Net, not Gross, rollover.

Were you trying to put the Net into a Traditional IRA as Basis?

[palmspringstax]

hello,  

here are more details for the IRA that she open with the original 132,000 that she received from her work in 2019.

IRA
Money Market IRA
Initial Deposit Amount $118,000
Interest Rate/Annual Percentage Yield 0.03000% / 0.03%

open in 11-1-2019 and 

Maturity Date 11-01-2020

but she took the money out in March 2020

It did not meet the roll over timeframe

thanks again for your guidance

[qbteachmt]

This doesn't seem to be what happened: "she open with the original 132,000 that she received from her work in 2019."

You told us she took a Complete Account distribution and paid taxes on it.

Now it is not Retirement money and does not qualify to be in an IRA any longer.

If she had taken the distribution from work, and within the Rollover timeframe, she kept some of it and rolled the rest, she would have a Partial Taxable Distribution and the rest as rollover. Or, if she put $118k into Roth, she would have Partial Taxable Distribution and the rest Taxable Conversion.

What you stated isn't allowed. You should talk to that Banker or brokerage about revising this.