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how to report 2020 IRA RMD where taxpayer returned distribution before 8/31/21 per IRS NOTICE 2020-51 due to COVID

7Mike7
Level 1

taxpayer followed rules to return IRA RMD to the custodian by 8/31/21, 1099 R shows RMD as taxable,

where does the amount returned get shown( on 1099R worksheet? on Other Income( Line 17) as a negative? 

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9 Replies 9
Terry53029
Level 12
Level 12

On the 1099R worksheet, scroll down to "qualified disaster distribution smart worksheet" line C

qbteachmt
Level 15

"to the custodian by 8/31/21"

2021 or 2020?

I don't know if you made a Typo or you have the wrong year in mind for this provision.

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"Level Up" is a gaming function, not a real life function.
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7Mike7
Level 1

sorry 8/31/20

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TaxGuyBill
Level 15

You cited Notice 2020-51, which basically says it is a "rollover".  Scroll down on the 1099-R worksheet and enter it as a "rollover".

Terry53029
Level 12
Level 12

@TaxGuyBill Mike said his client paid back a distribution. It is not a rollover and should be reported as I described earlier.

The notice 2020-51 is not only information for rollovers. This is from that notice, and the part that would apply to Mike's client.

 D. Permitted repayments of RMDs previously distributed from an IRA. In the case of
an IRA owner or beneficiary who has already received a distribution of an amount that
would have been an RMD in 2020 but for section 2203 of the CARES Act or section 114
of the SECURE Act, the recipient may repay the distribution to the distributing IRA, even
if the repayment is made more than 60 days after the distribution, provided the
repayment is made no later than August 31, 2020. The repayment will be treated as a
rollover for purposes of § 408(d)(3) of the Code, but will not be treated as a rollover for
purposes of the one rollover per 12-month period limitation in § 408(d)(3)(B) and the
restriction on rollovers for nonspousal beneficiaries in § 408(d)(3)(C). 

TaxGuyBill
Level 15

@Terry53029 wrote:

@TaxGuyBill Mike said his client paid back a distribution. It is not a rollover and should be reported as I described earlier.

The notice 2020-51 is not only information for rollovers. This is from that notice, and the part that would apply to Mike's client.

 D. Permitted repayments of RMDs previously distributed from an IRA. In the case of
an IRA owner or beneficiary who has already received a distribution of an amount that
would have been an RMD in 2020 but for section 2203 of the CARES Act or section 114
of the SECURE Act, the recipient may repay the distribution to the distributing IRA, even
if the repayment is made more than 60 days after the distribution, provided the
repayment is made no later than August 31, 2020. The repayment will be treated as a
rollover for purposes of § 408(d)(3) of the Code, but will not be treated as a rollover for
purposes of the one rollover per 12-month period limitation in § 408(d)(3)(B) and the
restriction on rollovers for nonspousal beneficiaries in § 408(d)(3)(C). 


 

As your citation points out, it *IS* treated as a rollover.

 

It is NOT a "Qualified Disaster Distribution".   See Form 8915-E and its instructions for what a "Qualified Disaster Distribution" means.

https://www.irs.gov/pub/irs-pdf/i8915e.pdf

 

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Terry53029
Level 12
Level 12

Yes @TaxGuyBill it is treated as a rollover" for tax purposes, but the entry in ProSeries is different

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TaxGuyBill
Level 15

@Terry53029 wrote:

Yes @TaxGuyBill it is treated as a rollover" for tax purposes, but the entry in ProSeries is different


Why?  Where do you get the idea that it should be entered as a "Qualified Disaster Distribution"?

 

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qbteachmt
Level 15

You can see how it looks for ProSeries in this topic:

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/repayment-of-rmd/00/125...

And, from Kiplinger:

"When filling out your Form 1040 or Form 1040-SR for the 2020 tax year, you should include the total amount of IRA distributions shown on your Form 1099-R on Line 4a of the 1040 form. Then you subtract the amount that you properly and timely returned to the IRA and report the remainder – even if $0 – on Line 4b of the 1040. Write "Rollover" next to line 4b so the IRS knows why the numbers don't match.

If federal income taxes were withheld from the original distribution and reported on the 1099-R form, remember to claim the withholding on Line 25b of the 1040 or 1040-SR form."

 

If they did not redeposit the Gross, you have only a partial rollover.

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"Level Up" is a gaming function, not a real life function.
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