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Before I complete the return, I would insist that the client contact Ameriprise and take the RMD for not only last year, but take it for 2017 as well. AND, request that Ameriprise automatically program for an RMD every year from now on so the client wouldn't have an excuse to overlook it. THEN once that's done, I would prepare the form (I forget - either 5329 or 8606) to request the 50% waiver and note in the explanation that the RMD for prior year was taken prior to submission of the tax return. I have that type issue with a long time client who is now age 85 and widowed. While she is coherent enough to discuss tax issues, I need to work through her granddaughter (an authorization has been given to me) to execute transactions for tax filings.

There may not be any point to this reply (I can't think of any "very common and very typical" reasonable cause other than "health") but since there are no other cents worth submitted, here's my two. First...what's wrong with using the elderly husband's poor health as a cause? It's not uncommon among elderly people for the "man of the house" to handle the finances. She could plausibly say he usually handled business but was unable to do it this year and she was distracted, exhausted, and traumatized from the caring for her elderly husband's extensive medical needs (you can exaggerate a little bit - I once expanded a cold to pneumonia). IRS is aware that health issues generally affect everybody in the house no matter who is sick. A few years ago I got a penalty abated for a lady: husband died, left $50K in IRA, clueless son withdrew it all, gave to sick mom, they told me long after 60 days, I attached a sheaf of medical bills, a heart-wrenching letter, and the penalty never materialized. A couple of notes: On $494 you're really not talking about any money. Is it worth a 5329 (does she want it fixed now-will she pay you)? IRS will eventually get around to it - I once left off a small Wells Fargo withdrawal and they billed me. Downside is you have to wait a year and a half for it. Tobacco fumes? I've got a client I'll swap with you. Both he and his wife smoke like chimneys. They drive to Missouri (low tobacco-tax) once a month, buy a large can of loose tobacco, break out their cigarette-rolling machine on the kitchen table, and whip up a 30-day supply of coffin nails. The aroma from their annual visit would drop an ox. Can't blame him too much, though - claims he had to give up whiskey and women, so what's left?