| Rollover IRA - Form 1099-R |
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nemoryer
Contributing Member
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| Rollover IRA - Form 1099-R |
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[Note: Earlier, I posted a similar question but this one is slightly different this time.]
Last year I received from a former employer, remaining balance of a Profit Sharing Account and I immediately deposited the check into my PSP ROLLOVER IRA at Fidelity. I am 63 years of age, and am fully retired.
My only other income are: (a) Social Securithy (b) small withdrawals from the 401(k), hence I had to file a 1040.
I was of the understanding that this money did NOT have to be reported , therefore, I started, finished and filed my 1040 via Turbotax.
LO AND BEHOLD, 2 weeks later, I received a 1099-R form from the employer. Should I do an AMENDED 1040 to declare this income even if it was a rollover and I did not cash any of its proceeds?
I do not want to get audited. BTW, the IRS accepted my initial return as filed.
Now, I am very nervous, confused and terribly concerned. I'm sure TurboTax will charge me more $$$ for doing an amended return.
THANK YOU.
nemor yer
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Fri Jan 28, 2011 10:47 pm |
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coaster
Senior Advisor
Cash: $ 1357.80
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Joined: 11 Oct 2005
Location: Wisconsin
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You made me work for this one. 
Getting a 1099-R didn't sound right because that's used for a distribution. I couldn't remember what happened when I rolled over my 401(k), so you sent me to dig through tax returns from 15 years ago. I discovered my rollover was reported on a form 5498.
Then I reread your post, and I see what happened. You received a check so it WAS a "distribution." But don't start breathing too hard; the agents with the shoulder holsters won't be on your doorstep at 2:30 AM. Because....
.... your distribution is NOT TAXABLE .... you put the entire amount right back into a qualified plan within 60 days ...
As for what to do, you might want to review this document I found on the IRS web site:
http://www.irs.gov/retirement/participant/article/0,,id=211527,00.html
and there's probably more on the site if you can find it. The relevant key words are "qualified", "rollover", "contribution", "1099-R", and "distribution."
Two things: the IRS always accept tax returns as filed (unless filed electronically and there's some obvious math error) discrepancies between income reported by payors and by payees isn't screened for. 'till later. Much later. Which goes to second point: DO NOT file an ammended return NOW if you find out that's what you need to do. Wait until after April 15; preferably until well after April 15. Your distribution isn't taxable, so there won't be any additional income, and no additional taxes due, therefore no late penalties. If you don't owe any tax, the April 15 date doesn't apply. I wouldn't be in such a hurry to file next year. Because of tax law changes, Intuit didn't even have some of the tax forms until well into January.
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Sat Jan 29, 2011 12:51 am |
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nemoryer
Contributing Member
Cash: $ 11.10
Posts: 48
Joined: 11 Apr 2009
Location: wa
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Dear Coaster - YOU are so SAVVY, what can I say? Thank you so much for such great reply and for putting my mind at ease.
And thanks for the reassurance that these gun-toting agents won't be at my doorstep at 2 a.m. 
HOWEVER, I am a worrier. The worst! I don't want to have to anticipate receiving the letter from the IRS next year asking me, whoa, why didn't I report the distribution. Also, this little incident might "ignite" an audit, though I have nothing to hide, just the word "audit" give me chills, I don't know why.
SO, I am taking the position that I "MUST" file an Amended 1040x, just to nip this in a bud NOW, and so that I can sleep at night, and not get further nightmares from it.
I tried to do an Amended 1040x through TurboTax but they said, not so quick! I have to wait until FEB. 10 to do it. Their online software isn't available yet.
LESSON LEARNED (if any!) - not to file until February of 2012.
PS - TTax also informs me today that if I filed a 1040X, there is NO charge to me, but that the return has to be manually sent to the Post Office.
Lastly, what is the significance of filing the 1040X after April 15? Is that to give way to the heavy traffic that will be occuring during then?
THANK YOU SO VERY MUCH. I appreciate it.
nemor yer
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Sat Jan 29, 2011 1:05 am |
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coaster
Senior Advisor
Cash: $ 1357.80
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I would really, REALLY wait until after Apr 15, especially since you'll be filing a paper return. The odds of your return either going amiss -or- "being noticed" are much higher if you send in a return for something they're not processing yet.
You really do have nothing to worry about; and if you're not at ease with the situation, it's only because it's something that isn't yet "right" in your mind. And really now, isn't most of life made up of stuff that "isn't right" and yet we (99% of us anyway) get along just fine?
There is nothing here that will trigger an audit so long as an ammended return is filed, and honestly, if you file within the next several years it won't even spark the slightest notice. All they're interested in is getting all the money that's due them under law, and since you owe no money, they're really not interested in you.
Be at ease.
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Sun Jan 30, 2011 6:23 am |
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nemoryer
Contributing Member
Cash: $ 11.10
Posts: 48
Joined: 11 Apr 2009
Location: wa
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You are so right in all your assessments! I am new to this, I am also very disappointed and mad at myself. I usually file in February but got negligent this year, also I was in a hurry to get my measly refund so that I could pay off a credit card I used during the holidays. That's all paid off but it left me with this dilemma. My life is a Catch-22 of sorts.
I have printed out your replies, I've tucked them into my 2010 IRS Folder. It gives me such comfort to hear you say all that you've said. Thank you so much. Since your last post, I've worried less and less.
When I received the last 1099 form few days ago, my heart sank and I felt stupid and could this happen to anyone stupider. Then your posts came and when I learned that millions get a letter from the IRS each year, suddenly all my fears melted and went away. Thank you very much, I appreciate your advice.
PS - just one last thing nags at me. When I file the paper Amended Return after April 15, do I have to (once again) include all the original attachment paperwork that was attached to the original return filed electronically? This year I had to file a Schedule C and other attachments due to a class action windfall that I received in 2010.
nemor yer
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Sun Jan 30, 2011 5:07 pm |
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coaster
Senior Advisor
Cash: $ 1357.80
Posts: 6686
Joined: 11 Oct 2005
Location: Wisconsin
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Ha ha You're making me work some more!! As I ammended my 1997 return (1040-X filed in 1999) and so went back to digging through my records, but that didn't answer the question as I just had the IRS forms stapled together but not the supporting documents. You'll find the answer if you go to the IRS website, type "1040-X instructions" into the search box, and download the first document that pops up. On page 11 it addresses attachments, and to summarize, you're require to attach copies of any documents that support the changes on your ammended return. I think that mostly a clear and concise explanation in the space provided for that is the most important part.
But you said something else in your post that has me puzzled: you mention schedule C and a class-action settlement in the same context. But schedule C is self-employment income. I don't think the proceeds from a legal settlement go on there.
Also, wrt saving copies of forum postings: just keep in mind they carry no weight with the IRS. My comments in my previous posts were based on information known thus far. It seems now the situation may be a bit more complex than first analysis, as you've introduced new information in your last post.
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Sun Jan 30, 2011 6:33 pm |
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nemoryer
Contributing Member
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Joined: 11 Apr 2009
Location: wa
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| Schedule C |
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I am puzzled too, but that is where TurboTax led me when I was inputting my data.
I received a Form 1099-MISC from Walmart as part of a class action suit and a W2 form also for wages of $97.50. The 1099-MISC reflected on Box 3 OTHER INCOME of $1063.
I think I may need to see a professional after all. This seems to be all messed up.
Though through my recollection, when I called the IRS, I think it was they who mentioned the Schedule C. But I am no longer sure, I am too stressed right now.
nemor yer
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Sun Jan 30, 2011 6:47 pm |
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coaster
Senior Advisor
Cash: $ 1357.80
Posts: 6686
Joined: 11 Oct 2005
Location: Wisconsin
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I wouldn't ever take IRS advice as the final word.
There's a space on 1040 for "other income"
Also some documents on the IRS site about income from "awards" and "settlements" that address that issue.
Is this the online T-Tax? Maybe you need the software version......
Keep us posted; I'm curious.
But.....please don't be stressed. You are really under virtually no time pressure. You have years to get this straightened out. Literally.
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Sun Jan 30, 2011 6:51 pm |
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nemoryer
Contributing Member
Cash: $ 11.10
Posts: 48
Joined: 11 Apr 2009
Location: wa
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Easier said than done I am falling to pieces and in tears. How did this ever get so screwed up?
I was looking for space on the online version where to put the 1099-MISC, there was none, but one thing led to another, I just followed the steps, and that is where it led me. Lo and behold, I am being directed to a Schedule C which I thought was correct, at the time, I did not question it.
My concern now is how to straighten out this mess without incurring huge $$$ for a CPA or an accountant advisor to help me through this.
The only good thing out of this, is that the small income for the time period of the class action which was $97.50, WAS REPORTED PROPERLY as income, so I should not owe them anything.
[To relieve your confusion, this is what I received ON ONE SHEET from the Administrator. Form W-2 form indicating salary of $97.50, and a Form 1099-MISC indicating total income of $1063.89.
All this was reported on TurboTax.
The attorneys for the class action suit also told me that the balance of $1063 was "NOT" taxable.
Now I wished I never got that money. Too much headache.
Thank you however for your reassurance not to worry. I will try not to.
nemor yer
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Sun Jan 30, 2011 6:58 pm |
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nemoryer
Contributing Member
Cash: $ 11.10
Posts: 48
Joined: 11 Apr 2009
Location: wa
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PS --- After calming down a bit, I looked at the Schedule C and it said PROFIT AND LOSS from a business. Could it be that it was correct after all, because the issuing party was Walmart, from a class action suit, I know it sounds far-fetched, but I did think that I was led there for a reason (?) They lost the lawsuit and had to pay people who worked for them for a certain period of time.
I will try to find a friend who may know of an accountant who can help me pro bono on how to correctly do the amendment.
Thank you again, so very much.
nemor yer
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Sun Jan 30, 2011 7:07 pm |
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oldguy
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quote:
Also, this little incident might "ignite" an audit, though I have nothing to hide, just the word "audit" give me chills, I don't know why.
nemoryer - you may be blowing this out of proportion. The auditor sets up an appointment, you go to their office, they show you what you did wrong, they fix it for you, type up a 1040X for you, and have you sign it - then you either you pay the tax owed or they pay you, depending on which way the error goes - no penalty. All very pleasant, they even give you coffee.
Of course, if you were purposely lying about your deductions, hiding cash income under the table, commiting fraud, intentionally evading taxes, etc - then they probably get testy - and live up to the urban legend of being really mean. But I can easily tell that you are not in that category - and an experienced auditor will know that even quicker than I did.
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Sun Jan 30, 2011 8:20 pm |
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nemoryer
Contributing Member
Cash: $ 11.10
Posts: 48
Joined: 11 Apr 2009
Location: wa
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You are right, once again, on all counts! I do have that propensity to blow things out of proportion, get overly stressed out and much ado over nothing! I have simmered down a bit since this morning.
I recall what happened with TurboTax. Intially, I was going to file a TurboTax Basic. Then I inquired about how and where to apply the Form 1099-Misc because it did not ask for it on the Basic form.
I was therefore advised by TT that I had to "upgrade" from the BASIC to TurboTax Business which was $69 for all intents and purposes (Their Basic was FREE as in F-R-E-E!)
I bit the bullet and agreed to the TT Business, hoping and believing it was the only way to declare the 1099-Misc. And it did what it said it would, it guided me step by step.
For now, I will just rest easy that what I was shown to do was the correct way, and if the auditor questions, I am armed with copies of W2 and 1099's that I've received in 2010. I have not hid any other income. but nice of you to point that out. [Smile!]
Thank you so much for all! I truly appreciate everything, from bottom of my heart.
nemor yer
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Sun Jan 30, 2011 9:45 pm |
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coaster
Senior Advisor
Cash: $ 1357.80
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Location: Wisconsin
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Glad to hear the upgraded version worked for you.
As oldguy says, the IRS isn't out to persecute people who make innocent mistakes, who correct their mistakes, and most importantly pay whatever the law says they owe. They're only out to get the cheaters and lyers.
Though, of course, mistakes can be made, and they have all the power on their side ....
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Mon Jan 31, 2011 6:29 am |
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