Incorrect 1099-R

[Summit1]

Taxpayer's Investment Manager requested (5) distributions in 2023 instead of (4). Taxpayer returned the last distribution that was received 12/31/23. Taxpayer was not provided with a Corrected 1099-R. 

The investment manager said he would not be given a corrected form and to show the total distribution in box 1 and reduce the taxable portion by the amount of the extra payment. I am assuming this will trigger a letter. Should there be an explanation attached to the return explaining the difference?

[Camp1040]

TP needs a  corrected 1099-R and a new investment advisor. You can't alter the info on the 1099-R to suit the circumstances.

[IRonMaN · Accepted solution]

Just show the payment as being rolled over.  There is a box for that on the 1099R worksheet 

[Summit1]

Slava

Thank you very much

[Summit1]

IRonMan

Thank you!

[IRonMaN]

You betcha!

[qbteachmt]

"Taxpayer was not provided with a Corrected 1099-R."

The 1099-R is used for money Out. That's what happened. Not Net, but simply Out.

"Should there be an explanation attached to the return explaining the difference?"

That is Form 5498 (assuming this is some sort of IRA account). That's your due diligence. Get that form, confirm the redeposit is not treated as contribution and is for the right amount (gross), because there would have been withholding, most likely. And confirm the rollover was timely.

[Summit1]

Taxpayer was told by his investment manager that 5498 would not be available until May. I will have taxpayer provide documentation of when he returned the funds.

Do I still use the 1099-R worksheet to adjust the payment out of the taxable box?

[qbteachmt]

"Taxpayer was told by his investment manager that 5498 would not be available until May."

That's because you have until the Filing Deadline to make a 2023 contribution. Get a copy of the account Statement, and there might be a deposit detail page, too.

"I will have taxpayer provide documentation of when he returned the funds."

Exactly.

"Do I still use the 1099-R worksheet to adjust the payment out of the taxable box?"

You mark the Rollover and enter the details. For instance:

Took 5 x $10,000 gross each time, got $8,000 net each time; only rolled over $8,000 = they forgot to make up the withholding to Gross Up the rollover.