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I am in WI and they often leave the state distribution out. It won't change the state income because that flows from the Federal. Put the amount of the Fed distribution in the box for the State. That will credit the client for the state tax withheld.

LOL Jack.

You have to put the $4945 in 14a. Same scenario as above; will not change WI taxable income.

That could be a big "Ouch" if you are referring to the same 1099R. If the question is general, all you can do is put the numbers in and the client will have to pay the tax owed to Fed. That would be a very unusual scenario as most often there is Fed tax withheld and no State. Also, be sure to take special note of the coding and enter it correctly on the 1099R worksheet. Good Luck!

Report the sale with a non-deductible loss on schedule D. When the 1099-C shows up, then you use form 982 so that the taxpayer doesn't pay taxes on the debt cancelation, just as Jack said.

I always input the state distribution the same as federal. This works for Ohio as Ohio tax begins with federal agi. My guess is that it may not matter what the state distribution is or, at the least, make it equal to the tax withheld. It had to be at least that much, correct? Or you could have the client contact the originator of the 1099R and ask why it was not included on the form and what it should be. Perhaps in your state it is critical and someone else will chime in.

Just put the gross amount in the state 1 distribution box, assuming it is subject to state tax - which I think is a valid assumption if there was that much state tax withheld.

"Ask the box."