8880

[Black Bart]

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).

[Matt Sova]

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.

[RLymanC]

401-k

If the 1099-R has the IRA box checked or is code 1, S, J, Q, or T the software should exclude.

[Black Bart]

Retirement Credit

If the 1099-R has the IRA box checked or is code 1, S, J, Q, or T the software should exclude.

Hers is premature (code 1), but do "normal" (over 59 1/2) distributions kill off the credit too?

[RLymanC]

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 8880

[Bill Tubbs]

Certain distributions

Code 7 will not zero form 8880

Code 7 = normal distributions.

Where do you see that code 7 is not one of the "Certain Distributions" that will not reduce this credit?

Bill

[Black Bart]

Practitioners' Priority Line

Code 7 = normal distributions.

Where do you see that code 7 is not one of the "Certain Distributions" that will not reduce this credit?

Bill

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?

Anybody know for sure what the rule is?

[Dennis V]

Certain distributions

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?

Anybody know for sure what the rule is?

According to the instructions for Form 8880,

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).