My client (age 38/ not a dependent/ HOH) would have qualified for a $104 retirement saving credit but she took enough ($10K) out of her 401K to wipe that out. The software doesn't take the withdrawal to 8880 and cancel the credit. Any ideas why it wouldn't zero it? (Puh-leeeze don't say "Get Lacerte"--I'm hoping it's me instead of the program).
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Force
In my software it carry's forward the info from the last 2 years and will put in the current year distributions. However, you can force the amounts if you wish, including current year. Perhaps your software requires a manual input of this amount.I would put a favorite quote in here, but it would get me banned from the board. -
401-k
If the 1099-R has the IRA box checked or is code 1, S, J, Q, or T the software should exclude.Last edited by RLymanC; 03-16-2006, 01:55 PM.Confucius say:
He who sits on tack is better off.Comment
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Retirement Credit
Hers is premature (code 1), but do "normal" (over 59 1/2) distributions kill off the credit too?Originally posted by RLymanCComment
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Form 8880
If line 8 on form 8880 exceeds the allowable adjusted gross income the credit will zero out.
Code 7 will not zero form 8880Last edited by RLymanC; 03-16-2006, 05:48 PM.Confucius say:
He who sits on tack is better off.Comment
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Certain distributions
Code 7 = normal distributions.Originally posted by RLymanC
Where do you see that code 7 is not one of the "Certain Distributions" that will not reduce this credit?
BillComment
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Practitioners' Priority Line
I called them and the lady I talked to agrees with Bill here. She says that all distributions reduce the credit. I'm troubled, however, by that phrase "certain distributions" in the instructions. It's sort of vague and I can't find any flat statements that rule in or rule out "normal" distributions (non-premature), or even anything referring to the premature distributions for that matter. Also, if she was right about it being all-inclusive, what would be the point of stating "certain distributions" in the instruction sheet?Originally posted by Bill Tubbs
Anybody know for sure what the rule is?Comment
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Certain distributions
According to the instructions for Form 8880,Originally posted by Black Bart
Do not include any:
● Distributions not taxable as the result of a rollover or a trustee-to-trustee transfer.
● Distributions from your IRA (other than a Roth IRA) rolled over to your Roth IRA.
● Loans from a qualified employer plan treated as a distribution.
● Distributions of excess contributions or deferrals (and income allocable to such contributions or deferrals).
● Distributions of contributions made during a tax year and returned (with any income allocable to such contributions) on or before the due date (including extensions) for that tax year.
● Distributions of dividends paid on stock held by an employee stock ownership plan under section 404(k).Comment
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