Pacun Posted November 16, 2022 Report Share Posted November 16, 2022 client withdraw 99K due to covid in 2020. Wife (filing jointly) had her workplace shutdown in 2020. On March 26, 2021, client deposited back 33K to his plan as a rollover for year 2020. IRS letter states that $144K were distributed and only $45K were reported as income. As you know, those $99K could be divided 3 ways and reported 1/3 in 2020, 1/3 in 2021, 1/3 in 2022 AND the whole or portion amount could have been rolled over before April 15, 2023. (1040Xs might be needed if taxes paid and monies were rolled over) I have seen people on this forum citing the sessions of the code when replying to posts. If you have a letter or cites please share them since I am preparing a letter for the IRS. Client efiled and form 8915-E was added as pdf. Quote Link to comment Share on other sites More sharing options...
Sara EA Posted November 17, 2022 Report Share Posted November 17, 2022 Something doesn't add up here. Take a close look at the IRS notice. It seems to have information that there was a $145k withdrawal, not $99k. And they seem to think $45k was repaid--does that match the return you filed? The notice should list where their info came from. Was there another 1099R you haven't seen? Your client paid tax on $33k in 2020, check. In 2021, $33k was repaid so no tax due for 2021, check. If the client repays $66k in 2022, no tax will be due and 2020 can be amended. Did the client elect for the 3-year-plan? Another thing to check. 1 Quote Link to comment Share on other sites More sharing options...
Catherine Posted November 17, 2022 Report Share Posted November 17, 2022 It sounds like there was another distribution from somewhere. I have had clients who took from multiple sources but only gave paperwork for one; could this be what happened? Get the wage & income transcript if you have POA and see what 1099-R forms were reported to the IRS. Quote Link to comment Share on other sites More sharing options...
Pacun Posted November 21, 2022 Author Report Share Posted November 21, 2022 yes, there were two distributions.... one for 45K and another for 99K. Client paid taxes and penalty on the 45K. the 99K was divided in 3 years and for 2020, 33K were re-invested (rolled over). IRS is wrong and I have seen the signed 8915-E form and sent a copy to the "auditor". 1 Quote Link to comment Share on other sites More sharing options...
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