I just now started my return on TurboTax

[question everything]

Have all the 1099s and have been working on my spreadsheets. State was worse!

What surprised me about Intuit - the maker of TurboTax - is that they want my permission to share my tax info with... tax authorities, I think.

They may have done it in previous years and I thought - what the hey... But now I read it and decided to skip.

Strange that our 1099 from Vanguard, for the RMDs, has both the Gross Distribution and Taxable Amount, but also X on the Taxable Amount not determined.

Will have to call them. But not on a Monday..

Sigh..

[CurtEastPoint]

1. What is the cost to use Turbo and is it online or do you install it?

[question everything]

2. Online. Price depends on the program how simple or complicated your return is

Supposedly they do it for free for a simple one

https://turbotax.intuit.com/personal-taxes/compare/online/

[forgotmylogin]

10. I get it for free online via my credit union.

There's a link to it right from my online-banking website.

They used to charge for state, and they will charge if you have a complicated return, but it's never been more than $30 for me. They can even take the fee out of your return (though this adds a service fee.)

The advantage is I can usually zip through the paperwork in less than an hour, and I always got my refund direct deposited lickety-split, no printing or mailing anything (usually they can pull your W2 from a database as well.) I imagine the refund will take longer this year since I have to wait till Feb 15 for a form, and I'm sure they're behind due to the shutdown.

[progree]

3. "Taxable Amount not determined"

State was worse!

Sounds like Minnesota (my state too). Background for non-Minnesotans, the legislature (R) and Governor Dayton (D) couldn't agree with a tax bill that would make Minnesota conform or mesh with the new federal tax law. I've been hearing MN state taxes will be a really big mess. Am hoping that Turbo Tax will make that effortless.

What surprised me about Intuit - the maker of TurboTax - is that they want my permission to share my tax info with... tax authorities, I think. They may have done it in previous years and I thought - what the hey... But now I read it and decided to skip.

Thanks for the heads up. I'm new to Turbo Tax this year. In the past 35 years, I've used a tax preparer (the same one).

Strange that our 1099 from Vanguard, for the RMDs, has both the Gross Distribution and Taxable Amount, but also X on the Taxable Amount not determined.

My guess is that some portion of it might not be taxable -- that would involve any contributions you made to traditional IRAs or 401Ks with after-tax dollars, aka "non-deductible contributions". They might not have that information, or enough information to determine exactly how much of your RMD is taxable, and how much isn't.

I have that box checked on my Vanguard Roth conversion. Some of the Traditional IRA that I converted to Roth consists of non-deductible contributions from decades ago. I (my tax preparer really) uses Form 8606 to determine the taxable amount of my Roth contribution.

[question everything]

6. Form 8606. Oh yes

We had 401K with employer that included "pre 1987" contributions. Which meant, I later realized, after tax contributions.

In 2006, I think, I read someplace that it was a bit complicated with having a 401K with a former employer and an IRA with a different custodian. I think that the rules have changed since.

So decided to roll over to Vanguard. Since these are, after all, Individual accounts we had to do them individually. My rep immediately noted the amount which was "pre-1987" and said that this amount would be cashed out.

Not so with my spouse's. And a larger amount.

Some years later we wanted to withdraw that amount and the Vanguard could not identify it. As I've read recently, mixing pre and after tax contribution is like adding cream to your coffee. Once they are mixed they cannot be separated. I consulted a CPA and honestly could not believe it.

So I called the iRS. Those days they would take a call, would take time to talk to you, especially off season. That agent was very emphatic - don't roll over after tax contributions! Take it out! Buy a car! Take a cruise! While employers do keep track of these "coffee and cream" funds, once they are rolled over they are mixed forever. I asked him why this info was not widely available and he said that very few people were affected. Ha!

Will have to file 8606 for the rest of our lives. No, deciding that 10% if after tax and pay tax on only 90% of the withdrawals won't do it.

Yes, Minnesota. Have to file Form M1M for one entry - Social Security benefit Subtraction - and the calculations for this line took a whole page on the instructions. And I don't think that it will change. Has nothing to do with adaptation to the federal one.

Still deep sigh..

[progree]

9. I had a 401K with both before tax and after tax parts

It was sooooooooooo long ago. When I rolled it over to Vanguard -- I think my former employer (NSP) simply sent me a check for the after-tax part. And I put it in my regular (non-IRA) checking account.

The rest of my 401K (all before-tax stuff) got rolled over into a "Rollover IRA" at Vanguard. I don't know why it isn't just considered a plain old ordinary Traditional IRA ... That's how I (and my tax preparer) have been treating it... SHEESH! Lots of new questions come to mind in this thread, erk.

EDITED for clarifications

[StatGirl]

4. "Taxable Amount Not Determined"

It's possible to make a charitable contribution directly from your IRA / 401k / 403b, and what you contribute isn't taxed.

Many retirement account companies will send the check to the designated charity, but they can't guarantee that contributions to that particular charity are indeed tax-deductible.

So it's up to you to adjust the amount of the RMD if some of it went to eligible charities. Turbo Tax should ask you about that later on in the process. If you didn't make any contributions, the entire RMD is taxable.

Disclaimer: I'm not a tax expert. I've just been reading up on how to make charitable contributions from our RMDs in 2019.

[progree]

5. Contributions to a traditional IRA that were made with after-tax dollars are also not taxable

aka "non-deductible contributions" -- contributions to a traditional IRA for which no deduction was claimed ...

there were and probably are some maximum amounts that can be contributed and deducted, and a higher limit for those that can also be contributed to an IRA that aren't deductible ...

it's been a long time since I contributed to an IRA, but that was my situation in the 1980s when I made some non-deductible contributions because my limit for deductible contributions had been reached.

[StatGirl]

7. That makes sense

You and I were posting at the same time.

In retrospect, it would have been better to have two IRAs, one for pre-tax contributions and one for post-tax contributions -- not that this helps you now! But I wonder if it's possible to now separate the money out into two accounts. You already have to do the bookkeeping to figure out which is which.

[progree]

8. I think it has to be prorated over all traditional IRAs

So they lump all your traditional IRAs (TIRAs) together into one TIRA (conceptually) so when you make withdrawals, it's always pro-rated -- if 10% of your TIRA contributions were made with after-tax dollars (no matter to which particular TIRA accounts), then 10% of your withdrawals are non-taxable and 90% of withdrawals are taxable .... no matter whether you segregated your TIRAs or not, and no matter which TIRA accounts you made withdrawals from.

Well, all investment earnings in traditional IRAs are taxable, so my paragraph above is over-simplified (sigh).

Another exception: special purpose IRAs, like inherited IRAs, are treated separately from regular traditional IRAs. And kept in separate properly titled accounts or there will be problems!

I've never made charitable contributions from an IRA (I very probably will in the not-to-distant future when I reach 70 1/2), so I left that out in the above, I would only be speculating about how that's treated.