Retirement Savers Credit

[Edsel]

I reported what I believe to be a glitch to Drake today - I hope I am correct.

A guy, reasonably low income, qualifies for $1000 retirement savers credit.  However, in 2017 he received a $53K distribution of an IRA.  This would invalidate his Retirement Savers Credit, except he qualified for an exception.

The $53K IRA distribution was inherited from his deceased father, who died the same year.  From what I can research, this is one of about a half-dozen exceptions which would prevent a distribution from blocking the credit.

Although there is a box to check for an exception, Drake had no provision for an exception to be identified in the data, and the distribution was blocking the credit.  I reported it to a customer support guy as a bug in the software.  However, I'm worried that I may be wrong, in spite of my research.  Here's why.

These exceptions have been around for quite a while, and the developers at Drake should have had this fixed years ago.  Whereas the taxpayers who fall into this situation do not number in the millions, I believe it may number in the thousands if properly reported.  There should have been enough incidents for this to come to the attention of Drake before now.  Most preparers are more accomplished than myself and surely one of the preparers has run into this before.

This is not a slam on Drake.  I've known Phil Drake since he was unknown in the '80s and am very happy with the software.

Have I missed something?  Are there other Drake users who have run into this?

 

[taxit]

It would not show up on the worksheet for the 8880. However it would still be part of the adjusted gross income. Probably enough to eliminate the savers credit.

[grandmabee]

2 hours ago, taxit said:

It would not show up on the worksheet for the 8880. However it would still be part of the adjusted gross income. Probably enough to eliminate the savers credit.

No it is from 2017 it would not show up in 2018 AGI

[jklcpa]

14 hours ago, Edsel said:

I reported what I believe to be a glitch to Drake today - I hope I am correct.

A guy, reasonably low income, qualifies for $1000 retirement savers credit.  However, in 2017 he received a $53K distribution of an IRA.  This would invalidate his Retirement Savers Credit, except he qualified for an exception.

The $53K IRA distribution was inherited from his deceased father, who died the same year.  From what I can research, this is one of about a half-dozen exceptions which would prevent a distribution from blocking the credit.

Although there is a box to check for an exception, Drake had no provision for an exception to be identified in the data, and the distribution was blocking the credit.  I reported it to a customer support guy as a bug in the software.  However, I'm worried that I may be wrong, in spite of my research.  Here's why.

These exceptions have been around for quite a while, and the developers at Drake should have had this fixed years ago.  Whereas the taxpayers who fall into this situation do not number in the millions, I believe it may number in the thousands if properly reported.  There should have been enough incidents for this to come to the attention of Drake before now.  Most preparers are more accomplished than myself and surely one of the preparers has run into this before.

This is not a slam on Drake.  I've known Phil Drake since he was unknown in the '80s and am very happy with the software.

Have I missed something?  Are there other Drake users who have run into this?

 

The instructions for line 4 of Form 8880 has a list of exceptions for those distributions that are not included on that line.  The second to last item under "Don't include any of the following" is

• Distributions from an inherited IRA by a nonspousal beneficiary.