Dealing with a $0 income Form 1099-R

[FEDUKE404]

Never mind.

[ATSMAN]

If a corrected 1099-R with all 0s has been issued it will eventually catch up in the mill. I would file the 1040 without the 1099-R and tell my client that a CP2000 may come if the IRS systems have not caught up. Solution is very simple, just fax the corrected 1099-R with the response to CP2000.

Few years back I had a client with a 1099-R with code G in Box 7 and large close to 1.2M rollover. He got a CP2000 for some reason and I faxed the 1099-R again and problem went away.

[Rapid Robert]

Is the only solution to paper file the federal/state tax returns, attach Form 8948, and just move on?

(While perhaps I could file a "correct" return without reporting either Form 1099-R, I think that would likely produce a very high probability of the issuance of a CP2000 notice looking for the original "unreported" $100k income.

Given a choice between possibly receiving a CP2000 which can be easily resolved, or paper filing, I would always choose to efile, as it will avoid so many other possible and much worse problems.

If it really bothers you to omit the 1099-R, why not include it and just enter $1 for the boxes where zero is not allowed?

[Rapid Robert]

It doesn't "bother" me to omit the $0 Corrected Form 1099-R. . .it's not allowable for efiling and the efiling software generates an error message.

You asked for suggestions or solutions, and whether paper filing was the only option (".Is the only solution to paper file the federal/state tax returns,"). No, it isn't. One is to omit the 1099-R which is what you would be doing when you paper file (the IRS does not want 1099-R forms attached to paper returns unless there was withholding). Another is to plug in a de minimis $1 amount as a workaround. (I'm sure you have filed returns before with greater than $1 rounding error). You don't like either of those, apparently, so go ahead and paper file.

[Anarchrist]

Why even waste the time entering a $0 form into the software?

[Lion]

The "zero" 1099-R is a Corrected 1099-R per OP. So, "undoes" the original 1099-R, replaces it with a null 1099-R. But, because there was never supposed to be a 1099-R, the corrected 1099-R now returns you to the position of NOT having a valid 1099-R in the first place.

You can ignore it, because it was never supposed to be -- keeping a copy of the corrected 1099-R to send in if a CP2000 arrives. Or, you can put in $1 if that's what it takes to make your software e-file -- again, keeping a copy. I would not file on paper; too many chances for errors on the IRS/state data entry.

[TaxGuyBill]

It doesn't "bother" me to omit the $0 Corrected Form 1099-R. . .it's not allowable for efiling and the efiling software generates an error message.

If you just completely leave it off (delete it), the software won't give you an error. There is no need to enter a form with all zeros (and the distribution code doesn't matter). There wouldn't be a CP2000 because there is nothing to correct (leaving it off to the IRS changing it to zero won't trigger it).

Of course, that is assuming that you think the all zeros are correct.

[ATSMAN]

I see a danger in e-filing a 1099-R with $1 because when the IRS computers catch up to processing the corrected 1099-R there may be a mismatch error that triggers a flag for CP2000. Once you have a copy of the corrected 1099-R that shows all 0s. Just don't include that 1099-R in the efile. Keep a copy to respond to any CP2000 if received.

[Rapid Robert]

I see a danger in e-filing a 1099-R with $1

To be clear, that was not the action I would take, I was simply trying to address the perceived need to include the 1099-R at all. The initial choice seemed to be whether to efile without the 1099-R, or paper file without the 1099-R (since the IRS does not want a 1099-R form attached to the paper return with no withholding shown). But the OP was insistent that the 1099-R had to be included, so I was simply offering a way to do that while still efiling.

However, I also don't think the IRS is going to send an CP2000 letter for a $1 discrepancy.