1099R

[Tracy Lee]

TP (90 years old, bless his heart) received 1099R for gross distribution of $227,701.42 with Box 2 showing all of it taxable; he said that was incorrect so I told him (many times) he had to go back to the company and get a corrected 1099R with the correct taxable amount.  With his permission we went ahead and filed his tax return and he paid ALOT of taxes, not knowing how long it would take to get the corrected 1099R or even if the company would do a corrected.  He received another replacement 1099R with the correct taxable amount this time but this company failed to mark the corrected box so it appears to be another distribution, although both 1099R's show as total distributions.  I believe he needs to go back, again, and request they mark the corrected box so he doesn't get a letter from the IRS later on showing he failed to report more income.  Am I correct in thinking this?  I do not want to send this man on another goose chase if I don't have to, but I also don't want to have to file multiple amendments later.

[Abby Normal]

What a mess! And the last time I checked, the IRS didn't have any of my income on my wage & income transcript.

If both 1099R forms were filed as original, then yes, it should show up twice, and I'm not 100% sure that filing a 3rd one marked corrected will fix this.

Keep the documentation handy and wait for a CP2000. Should be easy enough to explain.

[Pacun]

What will be the correction? I guess one 1099-R with 0. Now which one was reduced to Zero? Will the IRS be able to zero in to the correct corrected 1099-R?

[Slippery Pencil]

14 hours ago, Tracy Lee said:

With his permission we went ahead and filed his tax return and he paid ALOT of taxes,

That was a terrible decision.  You make it sound like you persuaded him to do this.  If so, that makes the decision even worse.  You should have persuaded him to file an extension and wait.  Live and learn.  File extensions, they're your friend.

[Jim Oh Bkkr]

I've seen a lot of corrected 1099-R's, very few, if any, were ever marked "corrected".  Even consolidated 1099's rarely are marked "corrected".

[JohnH]

6 hours ago, Slippery Pencil said:

That was a terrible decision.  You make it sound like you persuaded him to do this.  If so, that makes the decision even worse.  You should have persuaded him to file an extension and wait.  Live and learn.  File extensions, they're your friend.

I agree.  The ONLY thing to do in this situation was to file an extension. If the client refuses, I’d tell them to find another preparer.  
 

But that horse has left the barn. now you’re stuck with unraveling the mess, which could easily take months or more.  Likely to be lots or unbillable (or  unnecessary) time wasted on this.  
 

Hopefully you’ve learned a valuable from this mistake.  Experiences like this are how one sharpens their skills. 

[Slippery Pencil]

7 hours ago, Jim Oh Bkkr said:

I've seen a lot of corrected 1099-R's, very few, if any, were ever marked "corrected".  Even consolidated 1099's rarely are marked "corrected".

Due dates are 3/31 for electronically filing 1099s.  A corrected 1099 isn't issued unless an incorrect 1099 has been filed w/ the irs.  If the 1st 1099 hasn't been filed, the new one is the originally filed, not corrected, thus the box doesn't get checked.  It is now after the due date and the 1099 has most likely been filed.  If a new one has to be filed, it would be corrected.  Most every corrected 1099 I've seen has the corrected box checked.  Final 1099s issued after preliminary 1099s that weren't filed don't have the corrected box checked. 

[michaelmars]

Many times you get 1099R's showing taxable when its a rollover.  If you take the check and move it yourself within the time frame, the payor has no way of knowing you are rolling it over.   I just file showing it as a rollover and have a copy of the timely deposit into another brokers account on file in case a notice gets issued.  I have never had a problem with this after sending a copy of the recipient statement.

[Catherine]

2 hours ago, Slippery Pencil said:

If the 1st 1099 hasn't been filed, the new one is the originally filed, not corrected, thus the box doesn't get checked.

Many of these will say "AMENDED" rather than corrected, at the top of the form. That way you know there have been changes (some of them marked!) but as far as the IRS is concerned, it's original.

[Catherine]

26 minutes ago, michaelmars said:

 I just file showing it as a rollover and have a copy of the timely deposit into another brokers account on file in case a notice gets issued.

I have the clients send me copies of checks (with issue date) plus copy of statement showing the deposit (dated) when the rollover happens, and save it. That way when the CP2000 shows up in 6-18 months, the client isn't scrambling to find documentation that, at that time, is at least one year and sometimes more than two years in the past.

[Max W]

I think an amended, or corrected. return is in order - but is should be paper filed with an explanation of what happened, the two 1099-R's and the closing  brokerage stmt.    The pertinent information on the docs should be circled in red with a letter notation ( A, B, C etc) and spelled out in the explanation.

What you want to do is to lay it out so it makes the reviewer's job the easiest possible.

[BulldogTom]

9 minutes ago, Max W said:

I think an amended, or corrected. return is in order - but is should be paper filed with an explanation of what happened, the two 1099-R's and the closing  brokerage stmt.    The pertinent information on the docs should be circled in red with a letter notation ( A, B, C etc) and spelled out in the explanation.

What you want to do is to lay it out so it makes the reviewer's job the easiest possible.

You remind me of the first CPA I worked for.   "Explain it so a 3 year old can understand".

Tom
Longview, TX