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Discussion:1099 R issues

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Discussion Forum Index --> Tax Questions --> 1099 R issues


Schenckdmm (talk|edits) said:

14 March 2014
I have seen several 1099-Rs the past few weeks with Gross distributions listed as taxable, Fed w/holdings and coded 1 (box 7) but the clients say they are rollovers. Each client I'm dealing with in these circumstances have proof for the distribution being rolled into IRAs with another Bank/or Investment firm.

It's after Feb 14th, so is the only option to have the client call IRS or how do you all in this forum handle these?

Thanks,

Jim

Seaside CPA (talk|edits) said:

14 March 2014
If the clients are not doing a direct rollover (broker to broker), this is how it would be reported on 1099R. All the broker that is distributing the $ knows is that client is taking the money out. The client would then have to have the proof that the rollovers occurred within the proper time period. You, as the preparer, would then have to report it properly as a rollover. If they are withholding taxes on the distribution, make sure the client rolled over the gross amount (not net).

Ckenefick (talk|edits) said:

14 March 2014
Well said by Seaside.

so is the only option to have the client call IRS

No, never. This isn't even an option.

WEISSEA (talk|edits) said:

14 March 2014
Proseries has a box you check on the 1099-R worksheet to rollover the amount. It reduces the taxable amount and writes Rollover on the 1040. The client then just needs to keep proof that the 60 day rollover period was met.

Death&Taxes (talk|edits) said:

14 March 2014
If there was withholding, you must know if they rolled over the 'gross' amount or the net check, and if the net check, the tax withheld is taxable. Once again, as Mr. Weiss implies, Know Thy Software!

Schenckdmm (talk|edits) said:

14 March 2014
Ok, so if they get me proof of the rollovers (which I have) then I can make adjustments in my software even though the 1099-R shows 1 or 7 in Box 7 , correct?

Ckenefick (talk|edits) said:

14 March 2014
You don't need proof per-se. You're not an auditor. You can simply ask the client if the amount was timely rolled over.

The probblem you will have here is that if gross was $10k, tax withheld was $1k, and net was $9k...client had to have rolled over the full $10k. If client only rolled $9k, then $1k is taxable and is subject to the 10% penalty.

Again, as Seaside pointed out: The Company that issued the check has no idea if client will roll over the money or not. They have no choice to show it as taxable with a Code 1. To the extent the client did properly roll it over, then show it that way on the 1040. Once in a while, an IRS Notice will come on this issue. That's when you need to prove it, with documentation.

STG (talk|edits) said:

14 March 2014
Trustee to trustee rollovers only! For the love of God clients, why is this so hard!!!

Schenckdmm (talk|edits) said:

15 March 2014
Thanks for the information, that helps me greatly.

Southparkcpa (talk|edits) said:

15 March 2014
I have found on these "60 day " re-deposits, the IRS is almost certainly going to issue a CP-2000. I hate em too. Trustee to Trustee is perfect BUT while we are not auditors, I make CERTAIN that my client has a deposit ticket or 5498 to evidence the rollover and I caution him on the 50/50 likelihood of an IRS inquiry.

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