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He will have penalties each year the excess remains in the IRA unless he corrects it by withdrawing with earnings now, is able to recharacterize to traditional, or until the year he distributes enough through a normal ROTH distribution to eliminate that penalty on the form 5329. Give the client his options because at over $400 in penalty each year, he may want to correct it. With my last one of these, the excess into his trad IRA was only $500 and client opted to leave it in because the penalty was only $30 and a distribution would be taken the following year and would eliminate the penalty anyway.

Did those clients have Ameritrade accounts that paid dividends, or were they Schwab investors all year and not ever with Ameritrade?

Are the EINs for the reporting payer the same on both 1099s? Is either marked corrected, amended, or have an issue date that indicates a more recent form? Yes, Schwab bought out Ameritrade during the year, but your post above still does not explain why the 1099-DIV in your original post reported qualified dividends in excess of the total ordinary dividends.

Wow, obviously Schwab's reporting system isn't categorizing the dividends properly. They merged with, or bought out, Ameritrade during 2023, so I suspect that this error may be related to that and that a correct form will be issued.

I think it is a limitation of IRS MeF system, not any of our tax software.

Not ATX, but I sent a return through about 1/2 hr ago and the ack was literally back within a minute. That is the amount of time to click on ack received that changes the status to "pending", click again to receive and process the ack that changes the status to "accepted" and mark the return "complete". Maybe it is something with ATX?

All of the off topic posts not related to tools deduction have been hidden.

I opened the storage area to where they all are and said someday I'll get to those. Closed the door and did something else. I've probably done that each time the topic has come up over the years. Today is the day! . . . maybe.

I still have those too, back to the 1999 tax year when it was called Saber Pro!

I'd prefer that this topic not be sidetracked into another gripe session until the poster's situation has been adequately discussed. It seems we already have several of those topics already going, so please stick to the subject of what the best approach and handling is, ethically, for the poster and the facts presented. Thanks.

I agree with Tom above, and also if this was a joint custody, then the son should be a qualifying child of the dad because the kids alternated weeks between the 2 homes and he died in August, then no one else (meaning the paternal grandfather in this case) could have had more custody than the dad unless it was possibly one week more by the mom.

Usually company's will have a secondary method of verification, but I guess not in this case. If client can't update the phone record because the account is now closed, perhaps the custodian will accommodate a request to mail hard copy of documents to the address of record and should work if that address hasn't changed. Client may have to do this in writing if this custodian refuses to listen to that type of request via phone call. I've had some luck with this method because a scammer doesn't have access if mailing to the original address on file. YMMV. This may end up on extension, and I think you need to put this back in the taxpayer's court for them to provide the documentation and for them to explain what transpired. The other choice is that the client could accept that the 1099R as presented is correct and file the returns. It can always be amended later.

That's true, but when I selected e-file through a vendor site, it replicated a 1096 for each type, and I'd assume that means that each was transmitted as separate batch with only like forms included. That appears to be the way ATX is handling it and had done so in past years, iirc. It's been since the GADof12, the Great ATX Debacle of 2012, since I used it though.

I may need some more coffee this morning. Client: I'll be dropping my taxes off this morning. Our 2nd child was born Feb 17th. Hope that helps us. Me: If she was born in 2023, I'll need her SSN. Me again: Oh, of course you meant 2023. We haven't reached the 17th of this month yet. At least I haven't ended a client call with "love you too" like a friend did. Friend's employer is a large city in FL. Friend and caller (a stranger to her) both had a good laugh.

Yes, only one type of 1099 per 1096.

Well, it was already established earlier in the discussion that the types of assets code "K" is used for are non-cash types and because FMV of cash IS readily determinable. As I already said, if only non-cash, there would be no transfer possible into a cash-only type bank account and no possibility of tax withheld or remitted, and that is the reason I speculated that it may be assets distributed in-kind with a change of ownership title. You already have a meeting set and only the broker, supervisor, or client would be the one(s) to tell you, or provide documentation, what asset(s) were transferred and/or to where. If something was "distributed" in-kind via name change from IRA ownership to individual, then that will be taxable. If that is the case, I'd ask how the gross and taxable portions reported on the 1099R were determined.

Code K indicates noncash distribution, yet custodian is saying "funds" were wired. How can that be if it was noncash? Also, if noncash, then it is entirely possible that there was no cash that could have been withheld and paid. Custodian should be able to tell your client exactly what these noncash assets were and where they were distributed to. I have several client whose brokers invested in PTP partnerships inside IRAs because of ROI and within acceptable risk. Is it possible your client's transaction involved only a change of account titling to client's personal name and is reported as a distribution?

Dividends in whole life policies aren't always paid to policy owners. In your clients case they were left in, and that's why they were available to pay premiums. Besides being paid to owners in cash, dividends can be left in and used to pay premiums, left on deposit that accumulate with interest, or to purchase paid-up additional whole life insurance. If there no paperwork explaining the payout and its components, the client's insurance agent or company should be able to provide the explanation and breakdown. The business clients I've had over the years with whole life-type policies received annual statements that showed the face value, CSV, termination dividends, any outstanding loans, accrued interest on loan, net value, and any potential taxable gain on surrender. Does your client have any statement from a prior year that may provide clues as to how the 1099R amount was determined? Maybe the amount isn't that farfetched. This policy is almost 70 years old, and that's a lot of time to accumulate value that's never been taxed.

As an aside, and I don't believe this is the type of policy your client had, but there is a type of policy called return of premium term life insurance. That type of policy is term insurance where the insured can have all of the premiums returned if he/she outlives the policy's maturity date. I've never known anyone that has this type of policy and have only read about it.

Does the 1099R received by the client show the entire cash amount that was received, or is it just the excess amount over premiums returned to him?

It does make sense if you think of a whole life policy's surrender in a different way. When the policy is surrendered and CSV is received, that is a return of premiums and the excess that is being reported as taxable is that which has grown beyond the premium, and that is why it's said that the premiums paid over the life of the policy is considered basis.

I don't think it automatically comes forward from 2022. When you update the file from last year to create the 2023 return, you would have to check the box to update the bill payment screen.

For MFS, they either both itemize or they both use the standard deduction. When you run the MFS calculations, from what you described with the husband paying the mortgage from an account solely in his name, he would get the entire interest deduction, and she would have to itemize even though the standard is higher. If you are still using Drake, in order for it to properly analyze joint vs separate returns, I believe you must have three separate input screens (and please make sure that the program doesn't show one itemizing and the other using the standard): one for the mortgage interest and any other potential deductions paid solely by the husband with "T" indicated at the top one for any potential itemized deductions paid solely by the spouse with "S" and a third one for any potential itemized deductions paid jointly with "J" Please watch for the state impact as well when presenting them with which filing status provides the best overall choice.

I ended up with a personal account to log into for SSA using that login.gov and then I realized there is no longer a link on that page for SSA BSO. I had to Google to find the BSO page and found that my old username show up in a drop down box on the BSO page that allows me to access it and file W-2s. If that hadn't worked, my backup plan was to use an online site to prepare and file them.

HVKen was referring to the actual FB group for the ATX software support, not the group I set up.