Accounting for IRA withdrawal in Quicken 2014


J

jo

First year for Ira withdrawal. Had Fed and State taxes withheld. I had cash in the Ira to cover it and received a check from my broker for the net amount. From reading various solutions online, I understand that the underlying approach is a split transaction in the receiving account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount from the Iraaccount to a pseudo account I use for holding undeposited checks. I've split the receiving transaction so that the taxes show up in the proper [asset] categories and the sum of the taxes offsets the transferred amount to leave the exact amount of the check I received in this holding account. The only part missing is how to get the gross amount to show up into an income category- Ira distribution, miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it correctly. Could use some help. It seems like I need to be able to assign a category to that transfered amount, but obviously I can't do that directly. RC?? John??Anyone?
 
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J

John Pollard

"jo" wrote

The only part missing is how to get the gross amount to show up into an
income category- Ira distribution, miscellaneous, ANYTHING!
----------------------------------------------------

Are you sure you need the gross amount to show up in a "category"? Or do you
just need it to show up in a Tax Line Item?

You can assign Tax Line Items to "transfers" (FROM or TO any account). See
the "Tax Schedule" button on the General tab of the Edit Account Details
dialog for the account.

You can also assign a tax line item to a specific transaction: right-click
the transaction and select the "Tax Line Item Assignments" choice (also
available for specific line items in a split transaction).
 
J

jo

"jo" wrote

The only part missing is how to get the gross amount to show up into an
income category- Ira distribution, miscellaneous, ANYTHING!
----------------------------------------------------

Are you sure you need the gross amount to show up in a "category"? Or do you
just need it to show up in a Tax Line Item?

You can assign Tax Line Items to "transfers" (FROM or TO any account). See
the "Tax Schedule" button on the General tab of the Edit Account Details
dialog for the account.

You can also assign a tax line item to a specific transaction: right-click
the transaction and select the "Tax Line Item Assignments" choice (also
available for specific line items in a split transaction).
I would like the gross amount to show up in an income category because it *is* income to me this year and to have it omitted from my P/L report is misleading without it. I do have the Tax Line Assignments set appropriatelyand the report is correct. I seem to need just one extra trick to get this income stream reflected where I want it.
 
J

John Pollard

"jo" wrote

"I would like the gross amount to show up in an income category because it
*is* income to me this year and to have it omitted from my P/L report is
misleading without it".
---------------------------------------------------------------------------

Wasn't it income back when you earned it ... before you contributed the
income to your IRA? If you treated it as income back then, wouldn't you be
double-counting it if you called it income a second time, now?

In any event, every category in Quicken has either an income or expense
"characteristic", even transfer categories.

The Income and Expense by Category report defaults to displaying all but
"Internal" transfers - so you should see your IRA withdrawal in that report
without any need for customization.

The Profit and Loss Statement, on the other hand, defaults to excluding all
transfers. If you Customize the P&L report and tell it to include all
transfers, you should see your IRA withdrawal transaction(s) reflected in
the report. You may need to tweak the Category selections to exclude the
"withdrawal" from the IRA account ... leaving only the "deposit" (in the
category, "FROM Ira Account") into the checking? account.
 
K

Ken

First year for Ira withdrawal. Had Fed and State taxes withheld. I had cash in the Ira to cover it and received a check from my broker for the net amount. From reading various solutions online, I understand that the underlying approach is a split transaction in the receiving account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount from the Ira account to a pseudo account I use for holding undeposited checks. I've split the receiving transaction so that the taxes show up in the proper [asset] categories and the sum of the taxes offsets the transferred amount to leave the exact amount of the check I received in this holding account. The only part missing is how to get the gross amount to show up into an income category- Ira distribution, miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it correctly. Could use some help. It seems like I need to be able to assign a category to that transfered amount, but obviously I can't do that directly. RC?? John?? Anyone?
OK. Calm down.

It's income, but, especially after the broker has taken taxes out, not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has been
earning money. In that case, the sum total cashed out (before taxes) is
income. Assuming that you're tracking both the IRA and your checking
account in Quicken, you hopefully have your IRA _marked_ as an IRA in
Quicken. (Look under account details on the IRA. Confirm that Quicken
thinks that the tax schedule for transfers out of the IRA are listed as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that the
broker sent your. However, in order to keep Quicken sane, do a split on
this transaction. In the split, first line, put down the gross amount
that was created in your IRA account before taxes. On the second line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from the IRA
to your checking account will show up as IRA income, and that income
will be the total amount, before taxes. The witholding will show up in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you have, then
the non-deductable contributions have been taxed in the year that you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions; $2,000
of non-deductable contributions (total of $7,000). Then, a number of
years later after your investments have grown, your IRA is now worth
$10,000. (Growth of another $3,000). You now take out $2,500 as a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you through all
the math, handy especially when you have multiple IRAs all over and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non taxable
portions of IRAs, so it counts it all as income.

KBeck.
 
J

jo

First year for Ira withdrawal. Had Fed and State taxes withheld. I had cash in the Ira to cover it and received a check from my broker for the net amount. From reading various solutions online, I understand that the underlying approach is a split transaction in the receiving account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount from theIra account to a pseudo account I use for holding undeposited checks. I've split the receiving transaction so that the taxes show up in the proper [asset] categories and the sum of the taxes offsets the transferred amount to leave the exact amount of the check I received in this holding account. The only part missing is how to get the gross amount to show up into an income category- Ira distribution, miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it correctly. Could use some help. It seems like I need to be able to assign a category tothat transfered amount, but obviously I can't do that directly. RC?? John?? Anyone?
OK. Calm down.

It's income, but, especially after the broker has taken taxes out, not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has been
earning money. In that case, the sum total cashed out (before taxes) is
income. Assuming that you're tracking both the IRA and your checking
account in Quicken, you hopefully have your IRA _marked_ as an IRA in
Quicken. (Look under account details on the IRA. Confirm that Quicken
thinks that the tax schedule for transfers out of the IRA are listed as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that the
broker sent your. However, in order to keep Quicken sane, do a split on
this transaction. In the split, first line, put down the gross amount
that was created in your IRA account before taxes. On the second line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from the IRA
to your checking account will show up as IRA income, and that income
will be the total amount, before taxes. The witholding will show up in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you have, then
the non-deductable contributions have been taxed in the year that you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions; $2,000
of non-deductable contributions (total of $7,000). Then, a number of
years later after your investments have grown, your IRA is now worth
$10,000. (Growth of another $3,000). You now take out $2,500 as a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you through all
the math, handy especially when you have multiple IRAs all over and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non taxable
portions of IRAs, so it counts it all as income.

KBeck.
Thanks for trying to explain how to do this. Unfortunately it still isn't working, but I also varied the procedure a bit and that may be the cause. Here's the current situation.
1) I have what you described: a simple IRA with all of it tax deductible contributions earning income over the years. The IRA account is configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the gross amount from the Ira account to my checking. That seemed like the logical way tomimic the actual event. However I cannot then split the Transfer; Quickenblocks me.

3) The closest I could come to getting anything correct was to Transfer each component of the total to my checking: the actual amount received, and the federal and state tax withheld. That accomplished reducing my Ira balance and assigning the withheld taxes to the correct categories, but I cannotfind any place, either in the Tax Planner, or in my P/L that the gross amount shows up as income. I really want it to appear in that latter, along with all other income. Having it just in the TAx Planner wouldn't suffice, even if it did work.

What am I missing?
 
Z

Zaidy036

jo said:
First year for Ira withdrawal. Had Fed and State taxes withheld. I
had cash in the Ira to cover it and received a check from my broker for
the net amount. From reading various solutions online, I understand
that the underlying approach is a split transaction in the receiving
account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount from the
Ira account to a pseudo account I use for holding undeposited checks.
I've split the receiving transaction so that the taxes show up in the
proper [asset] categories and the sum of the taxes offsets the
transferred amount to leave the exact amount of the check I received in
this holding account. The only part missing is how to get the gross
amount to show up into an income category- Ira distribution, miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it correctly.
Could use some help. It seems like I need to be able to assign a
category to that transfered amount, but obviously I can't do that
directly. RC?? John?? Anyone?
OK. Calm down.

It's income, but, especially after the broker has taken taxes out, not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has been
earning money. In that case, the sum total cashed out (before taxes) is
income. Assuming that you're tracking both the IRA and your checking
account in Quicken, you hopefully have your IRA _marked_ as an IRA in
Quicken. (Look under account details on the IRA. Confirm that Quicken
thinks that the tax schedule for transfers out of the IRA are listed as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that the
broker sent your. However, in order to keep Quicken sane, do a split on
this transaction. In the split, first line, put down the gross amount
that was created in your IRA account before taxes. On the second line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from the IRA
to your checking account will show up as IRA income, and that income
will be the total amount, before taxes. The witholding will show up in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you have, then
the non-deductable contributions have been taxed in the year that you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions; $2,000
of non-deductable contributions (total of $7,000). Then, a number of
years later after your investments have grown, your IRA is now worth
$10,000. (Growth of another $3,000). You now take out $2,500 as a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you through all
the math, handy especially when you have multiple IRAs all over and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non taxable
portions of IRAs, so it counts it all as income.

KBeck.
Thanks for trying to explain how to do this. Unfortunately it still isn't
working, but I also varied the procedure a bit and that may be the cause.
Here's the current situation.
1) I have what you described: a simple IRA with all of it tax deductible
contributions earning income over the years. The IRA account is
configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the gross
amount from the Ira account to my checking. That seemed like the logical
way to mimic the actual event. However I cannot then split the Transfer;
Quicken blocks me.

3) The closest I could come to getting anything correct was to Transfer
each component of the total to my checking: the actual amount received,
and the federal and state tax withheld. That accomplished reducing my
Ira balance and assigning the withheld taxes to the correct categories,
but I cannot find any place, either in the Tax Planner, or in my P/L that
the gross amount shows up as income. I really want it to appear in that
latter, along with all other income. Having it just in the TAx Planner
wouldn't suffice, even if it did work.

What am I missing?
Set up the split in the IRA before transfer and, yes, you will have to
start with the gross amount and deduct the other items to get to the net
because they are all being transferred.
 
R

Richard

jo said:
First year for Ira withdrawal. Had Fed and State taxes withheld. I
had cash in the Ira to cover it and received a check from my broker for
the net amount. From reading various solutions online, I understand
that the underlying approach is a split transaction in the receiving
account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount from the
Ira account to a pseudo account I use for holding undeposited checks.
I've split the receiving transaction so that the taxes show up in the
proper [asset] categories and the sum of the taxes offsets the
transferred amount to leave the exact amount of the check I received in
this holding account. The only part missing is how to get the gross
amount to show up into an income category- Ira distribution,
miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it correctly.
Could use some help. It seems like I need to be able to assign a
category to that transfered amount, but obviously I can't do that
directly. RC?? John?? Anyone?
OK. Calm down.

It's income, but, especially after the broker has taken taxes out, not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has been
earning money. In that case, the sum total cashed out (before taxes) is
income. Assuming that you're tracking both the IRA and your checking
account in Quicken, you hopefully have your IRA _marked_ as an IRA in
Quicken. (Look under account details on the IRA. Confirm that Quicken
thinks that the tax schedule for transfers out of the IRA are listed as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that the
broker sent your. However, in order to keep Quicken sane, do a split on
this transaction. In the split, first line, put down the gross amount
that was created in your IRA account before taxes. On the second line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from the IRA
to your checking account will show up as IRA income, and that income
will be the total amount, before taxes. The witholding will show up in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you have, then
the non-deductable contributions have been taxed in the year that you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions; $2,000
of non-deductable contributions (total of $7,000). Then, a number of
years later after your investments have grown, your IRA is now worth
$10,000. (Growth of another $3,000). You now take out $2,500 as a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you through all
the math, handy especially when you have multiple IRAs all over and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non taxable
portions of IRAs, so it counts it all as income.

KBeck.
Thanks for trying to explain how to do this. Unfortunately it still isn't
working, but I also varied the procedure a bit and that may be the cause.
Here's the current situation.
1) I have what you described: a simple IRA with all of it tax deductible
contributions earning income over the years. The IRA account is
configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the gross
amount from the Ira account to my checking. That seemed like the logical
way to mimic the actual event. However I cannot then split the Transfer;
Quicken blocks me.

3) The closest I could come to getting anything correct was to Transfer
each component of the total to my checking: the actual amount received,
and the federal and state tax withheld. That accomplished reducing my
Ira balance and assigning the withheld taxes to the correct categories,
but I cannot find any place, either in the Tax Planner, or in my P/L that
the gross amount shows up as income. I really want it to appear in that
latter, along with all other income. Having it just in the TAx Planner
wouldn't suffice, even if it did work.

What am I missing?
What you are missing is the fact that only the gain on the sale of your
funds is current year income. The original value of the funds sold are not
current year income. It should have been considered and shown as part of
your gross salary income in the year that you transfer the funds into the
IRA account. In other words, the portion of your salary transferred into
your IRA to buy funds was a payroll deduction, transfer to your IRA account,
the same as taxes or other payroll deductions, i.e. insurance. The gain
shows in your current year reports as 'RlzdGain'. If the original cost was
included in current year income, you would be 'double counting'. Once when
you earned the money that you transferred to the IRA account to buy the
funds and again when you withdraw the funds for the IRA account. Hope this
solves your problem. In summary, the original cost of the funds was income
in the year earned and transferred. The gain on the sale of the funds is
income in the year that you withdrew the funds.

Now, hopefully I don't have you completely confused.
 
J

jo

jo said:
On 11/28/2014 3:11 PM, jo wrote:
First year for Ira withdrawal. Had Fed and State taxes withheld. I
had cash in the Ira to cover it and received a check from my broker for
the net amount. From reading various solutions online, I understand
that the underlying approach is a split transaction in the receiving
account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount from the
Ira account to a pseudo account I use for holding undeposited checks..
I've split the receiving transaction so that the taxes show up in the
proper [asset] categories and the sum of the taxes offsets the
transferred amount to leave the exact amount of the check I receivedin
this holding account. The only part missing is how to get the gross
amount to show up into an income category- Ira distribution,
miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it correctly.
Could use some help. It seems like I need to be able to assign a
category to that transfered amount, but obviously I can't do that
directly. RC?? John?? Anyone?


OK. Calm down.

It's income, but, especially after the broker has taken taxes out, not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has been
earning money. In that case, the sum total cashed out (before taxes) is
income. Assuming that you're tracking both the IRA and your checking
account in Quicken, you hopefully have your IRA _marked_ as an IRA in
Quicken. (Look under account details on the IRA. Confirm that Quicken
thinks that the tax schedule for transfers out of the IRA are listed as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that the
broker sent your. However, in order to keep Quicken sane, do a split on
this transaction. In the split, first line, put down the gross amount
that was created in your IRA account before taxes. On the second line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from the IRA
to your checking account will show up as IRA income, and that income
will be the total amount, before taxes. The witholding will show up in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you have, then
the non-deductable contributions have been taxed in the year that you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions; $2,000
of non-deductable contributions (total of $7,000). Then, a number of
years later after your investments have grown, your IRA is now worth
$10,000. (Growth of another $3,000). You now take out $2,500 as a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you through all
the math, handy especially when you have multiple IRAs all over and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non taxable
portions of IRAs, so it counts it all as income.

KBeck.
Thanks for trying to explain how to do this. Unfortunately it still isn't
working, but I also varied the procedure a bit and that may be the cause.
Here's the current situation.
1) I have what you described: a simple IRA with all of it tax deductible
contributions earning income over the years. The IRA account is
configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the gross
amount from the Ira account to my checking. That seemed like the logical
way to mimic the actual event. However I cannot then split the Transfer;
Quicken blocks me.

3) The closest I could come to getting anything correct was to Transfer
each component of the total to my checking: the actual amount received,
and the federal and state tax withheld. That accomplished reducing my
Ira balance and assigning the withheld taxes to the correct categories,
but I cannot find any place, either in the Tax Planner, or in my P/L that
the gross amount shows up as income. I really want it to appear in that
latter, along with all other income. Having it just in the TAx Planner
wouldn't suffice, even if it did work.

What am I missing?
What you are missing is the fact that only the gain on the sale of your
funds is current year income. The original value of the funds sold are not
current year income. It should have been considered and shown as part of
your gross salary income in the year that you transfer the funds into the
IRA account. In other words, the portion of your salary transferred into
your IRA to buy funds was a payroll deduction, transfer to your IRA account,
the same as taxes or other payroll deductions, i.e. insurance. The gain
shows in your current year reports as 'RlzdGain'. If the original cost was
included in current year income, you would be 'double counting'. Once when
you earned the money that you transferred to the IRA account to buy the
funds and again when you withdraw the funds for the IRA account. Hope this
solves your problem. In summary, the original cost of the funds was income
in the year earned and transferred. The gain on the sale of the funds is
income in the year that you withdrew the funds.

Now, hopefully I don't have you completely confused.
I am completely confused :( I can see this is likely going to be a tax nightmare. I thought this was simple because I fell into your first scenario: nothing but tax deductible contributions, which meant the gross withdrawal *was* income this year.

Whatever funds went into this Ira were made decades ago because I had to retire on disability back in the 1980s. I have absolutely no records of how anything was accounted for back then but vaguely remember that the company decided at year end how much they would put in your IRA account, based on your salary and how well they had done that year (could be a false memory); I don't remember what my W2s looked like at all but I wasn't contributing monthly, assuming I was contributing at all. I don't have my tax returns from back then either, of course, to see how I was reporting things either. If I was deducting the company contribution (and they were reporting it on a W2), are we back to the simple situation?

The company was bought out by another, and has recently changed hands again.. I do know some of the people who worked with me back then may be able to get a little clarification on how things worked, but doubt that it will be enough. When I left the company, I rolled the account into another Ira at Fidelity and there were a few years where I was doing a little consulting and contributed a small amount to the account. I did deduct my contribution when I filed tax returns for those years.

Any gains tracked only go back to about 8 years ago, after I stopped contributing and just let my financial advisor adjust the mix of investments. There is a cost basis attached to the account,as of the date she inherited it from Fidelity, but I doubt that's helpful in determining what proportion ofmy current year's withdrawal is taxable to me. This is a mess and obviously not a Quicken problem.
 
J

jo

Ken,

I think we have made my situation overcomplicated, and my lack of memory orrecords has made it worse. The below came from website describing taxation of withdrawals:

Case 1 ) "No nondeductible contributions: Distributions out of the account after age 59½ are taxed as ordinary income. You don't have to calculate investment gains."

I doubt that I would have tossed all records if I had any inkling that I would have to do some special calculations when I finally made a withdrawal; I tend to keep everything. I suspect that all the company contributions were deductible in the year made, and were reported as such in my tax returns. Certainly all my contributions after leaving the company were in this category. So it isn't double taxation, and we can go back to trying to figure out how to enter this in Quicken if you agree :) (I'm still going to ask my old associates for details)

jo
 
R

Richard

jo said:
jo said:
11 PM, jo wrote:
First year for Ira withdrawal. Had Fed and State taxes withheld. I
had cash in the Ira to cover it and received a check from my broker
for
the net amount. From reading various solutions online, I understand
that the underlying approach is a split transaction in the receiving
account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount from
the
Ira account to a pseudo account I use for holding undeposited
checks.
I've split the receiving transaction so that the taxes show up in
the
proper [asset] categories and the sum of the taxes offsets the
transferred amount to leave the exact amount of the check I received
in
this holding account. The only part missing is how to get the gross
amount to show up into an income category- Ira distribution,
miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it correctly.
Could use some help. It seems like I need to be able to assign a
category to that transfered amount, but obviously I can't do that
directly. RC?? John?? Anyone?


OK. Calm down.

It's income, but, especially after the broker has taken taxes out, not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has been
earning money. In that case, the sum total cashed out (before taxes)
is
income. Assuming that you're tracking both the IRA and your checking
account in Quicken, you hopefully have your IRA _marked_ as an IRA in
Quicken. (Look under account details on the IRA. Confirm that Quicken
thinks that the tax schedule for transfers out of the IRA are listed
as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that the
broker sent your. However, in order to keep Quicken sane, do a split
on
this transaction. In the split, first line, put down the gross amount
that was created in your IRA account before taxes. On the second line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from the
IRA
to your checking account will show up as IRA income, and that income
will be the total amount, before taxes. The witholding will show up in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you have,
then
the non-deductable contributions have been taxed in the year that you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions; $2,000
of non-deductable contributions (total of $7,000). Then, a number of
years later after your investments have grown, your IRA is now worth
$10,000. (Growth of another $3,000). You now take out $2,500 as a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you through all
the math, handy especially when you have multiple IRAs all over and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non taxable
portions of IRAs, so it counts it all as income.

KBeck.

Thanks for trying to explain how to do this. Unfortunately it still
isn't
working, but I also varied the procedure a bit and that may be the
cause.
Here's the current situation.
1) I have what you described: a simple IRA with all of it tax
deductible
contributions earning income over the years. The IRA account is
configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the gross
amount from the Ira account to my checking. That seemed like the
logical
way to mimic the actual event. However I cannot then split the
Transfer;
Quicken blocks me.

3) The closest I could come to getting anything correct was to Transfer
each component of the total to my checking: the actual amount received,
and the federal and state tax withheld. That accomplished reducing my
Ira balance and assigning the withheld taxes to the correct categories,
but I cannot find any place, either in the Tax Planner, or in my P/L
that
the gross amount shows up as income. I really want it to appear in
that
latter, along with all other income. Having it just in the TAx Planner
wouldn't suffice, even if it did work.

What am I missing?
What you are missing is the fact that only the gain on the sale of your
funds is current year income. The original value of the funds sold are
not
current year income. It should have been considered and shown as part of
your gross salary income in the year that you transfer the funds into the
IRA account. In other words, the portion of your salary transferred into
your IRA to buy funds was a payroll deduction, transfer to your IRA
account,
the same as taxes or other payroll deductions, i.e. insurance. The gain
shows in your current year reports as 'RlzdGain'. If the original cost
was
included in current year income, you would be 'double counting'. Once
when
you earned the money that you transferred to the IRA account to buy the
funds and again when you withdraw the funds for the IRA account. Hope
this
solves your problem. In summary, the original cost of the funds was
income
in the year earned and transferred. The gain on the sale of the funds is
income in the year that you withdrew the funds.

Now, hopefully I don't have you completely confused.
I am completely confused :( I can see this is likely going to be a tax
nightmare. I thought this was simple because I fell into your first
scenario: nothing but tax deductible contributions, which meant the gross
withdrawal *was* income this year.

Whatever funds went into this Ira were made decades ago because I had to
retire on disability back in the 1980s. I have absolutely no records of
how anything was accounted for back then but vaguely remember that the
company decided at year end how much they would put in your IRA account,
based on your salary and how well they had done that year (could be a
false memory); I don't remember what my W2s looked like at all but I
wasn't contributing monthly, assuming I was contributing at all. I don't
have my tax returns from back then either, of course, to see how I was
reporting things either. If I was deducting the company contribution (and
they were reporting it on a W2), are we back to the simple situation?

The company was bought out by another, and has recently changed hands
again. I do know some of the people who worked with me back then may be
able to get a little clarification on how things worked, but doubt that it
will be enough. When I left the company, I rolled the account into another
Ira at Fidelity and there were a few years where I was doing a little
consulting and contributed a small amount to the account. I did deduct my
contribution when I filed tax returns for those years.

Any gains tracked only go back to about 8 years ago, after I stopped
contributing and just let my financial advisor adjust the mix of
investments. There is a cost basis attached to the account,as of the date
she inherited it from Fidelity, but I doubt that's helpful in determining
what proportion of my current year's withdrawal is taxable to me. This is
a mess and obviously not a Quicken problem.
Jo,

Relax, relax, relax, breathe, breathe, breathe. Not necessary to worry,
because as described below, you really don't have a problem. Your just
confused about financial income vs. taxable income.

Based on all of your posts, I'm going to make a few assumptions:

1. Your prior years' tax returns were properly prepared either by you or a
competent tax accountant.
2. You do not have the IRS chasing you.
3. You have little accounting or tax knowledge.
3. You are confusing income for financial accounting (Income and Expense
Report in Quicken) with taxable income. These are two completely different
animals.

Now, based on the above, this year you will be taxed on 100% of your IRA
distribution. A regular IRA, not a Roth IRA, always have 100% of the
distribution taxed in the year of withdrawal. You don't need to worry about
any cost basis versus investment earnings for tax purposes. The company
managing your IRA will provide all of the necessary tax documents by the end
of January. Your 2014 tax preparation should not be a problem.

The cost basis is only necessary when selling stock from a brokerage
account. It may also be necessary for Roth IRA's, but since I don't have
one, I'm not sure. To spare anymore confusion, I won't go into an
explanation regarding brokerage or Roth IRA accounts since it isn't part of
you current concern.

From a financial accounting perspective, the only income this year is the
interest or dividends earned this year and any increase in market value
(RlzdGain) on the funds sold to generate the cash distributed.. That's what
will show on a Quicken Income and Expense Report. Remember, the amounts
transferred into you IRA and the interest and dividends from prior years was
reported as income in the year earned.

From a taxable income perspective, you pay tax on 100% of the distribution
because neither the amount you contributed to the IRA nor the interest or
dividends earned were ever taxed. Since 100% is taxed there is no need to
know how much is your original contribution or how much you earned on it or
how much the market value increased. 100% is 100%.

If you have properly entered, into Quicken your contributions, rollovers,
mutual fund purchases, interest and dividends earned and sales and
distributions, you Quicken reports will be properly stated. If not, I can't
help you, nor do I think anyone else can, since you don't have the records.

A point of curiosity. How many years of data do you have in your Quicken
file?

I don't know if I can be of any further help. While I'm a retired Corporate
Accountant, I an not, nor have I ever been a Tax Accountant. I know enough
to accurately prepare my personal tax returns. I purposely stay away from
doing taxes for others because I don't enjoy it nor do I want the
responsibility. I do believe that I understand Quicken and I am comfortable
using the 'interview process' in TurboTax. Maybe R.C. White will jump into
this discussion. He's a retired Public Accountant and has more experience in
this area then I do.
 
K

Ken

Ken,

I think we have made my situation overcomplicated, and my lack of memory or records has made it worse. The below came from website describing taxation of withdrawals:

Case 1 ) "No nondeductible contributions: Distributions out of the account after age 59½ are taxed as ordinary income. You don't have to calculate investment gains."

I doubt that I would have tossed all records if I had any inkling that I would have to do some special calculations when I finally made a withdrawal; I tend to keep everything. I suspect that all the company contributions were deductible in the year made, and were reported as such in my tax returns. Certainly all my contributions after leaving the company were in this category. So it isn't double taxation, and we can go back to trying to figure out how to enter this in Quicken if you agree :) (I'm still going to ask my old associates for details)

jo
Jo,

Sorry I wasn't on to reply over the last few days; busy with work.

Hokay, it's like this.
The money in your IRA is in the following buckets, with the IRA's take
on this:
1. Bucket #1: Money that you put into the IRA in a particular year and
that you _deducted_ on your federal return the year you did that. That's
a "deductable" IRA contribution.
a. Did you pay tax on that money the year you put it into the IRA?
Answer: No. That's the definition of a deductible contribution, you
deducted the income from your tax return _in_ _that_ _year_. An example:
if you put $2000 into your IRA in 1993 and you deducted that from your
taxes in that year, that meant you took your gross income for that year,
knocked off $2000 for the deductible IRA contribution, and the Feds
didn't tax the contribution.
b. When you take that money _out_, later, the Feds want their slice
of it, using the tax rates present during the year you took it out.
(Note: _not_ the tax rates when you put it _in_. That's usually a Good
Thing, since one typically has less income and lower tax rates after one
retires as compared to before.)

2. Bucket #2: Money that you put into the IRA in a particular year and
that you did _not_ deduct from your income in the year that you did
that. This is the definition of a "non-deductible contribution". Yes,
one can do that; heck, I do that. Sometimes it's been when the income
limits in a particular year are such that one _cannot_ make a deductible
contribution (one makes over "yea", whatever "yea" is: Then the IRS
says, "no cookie (deductible contribution) for you!".
a. Did you pay tax on that money in the year you put it into the IRA?
Answer: Yes. You couldn't deduct the IRA contribution from your gross
income. An example: You put in $2000, the IRS said you couldn't deduct
it, so you didn't.
b. When you take that money out later, the IRS says, "You already paid
taxes on that money. We're not taking a second bite of the apple, you
don't have to pay taxes on it again! So don't."

3. Bucket #3: You've got money in your IRA and it's been in there. Value
of the account has gone up over time: Dividends, reinvested Capital
Gains, and (if you're in mutual funds/stocks/bonds etc.) when you sell
those financial instruments, you get more than you paid for them. (Yeah,
capital gains, no kidding.) A simple way to think of it: Whatever's in
that account that's not from Bucket #1 or Bucket #2 is Bucket #3. And,
yes, it is possible that bucket #3 might be _negative_, one can have
capital losses, too.
a) Did you pay any taxes on that increase in value? Answer: No. This is
one of the major reasons that people like to invest in IRAs, even if the
contribution is non-deductible: They grow tax-free.
b) When you take that money out later, the IRS says, "You haven't paid
taxes on that stuff, reinvested dividends/capital gains or just straight
capital gains/losses. You sure as heck are going to be paying taxes on
it now!"

Just to be clear about Bucket #2: Suppose that the limit of a deductible
contribution in a given year is some amount, and you put in more than
that. The amount below the limit is deductible and is going to be taxed
when you take it out; the amount above that limit is non-deductible and
you won't be paying taxes on it when you take it out. Example: Suppose
that in 1995 the limit is $5000. (I don't remember what it was, one can
look it up.) You put in $7000: Then, that year, you get a $5000
deduction on your taxes and 1) a $5000 deductible contribution and 2) a
$2000 non-deductible contribution into your IRA.

At the end of any given year before you start taking money out, the
amounts in Buckets #1 and #2 are fixed and are a sum of the amounts you
put in Buckets #1 and #2 in previous years. The amount in Bucket #3
depends upon how well your investments are doing. At the end of any
given year, the sum of Buckets 1, 2, and 3 _is_ the year-end value of
your IRA. Period.

Now comes the time when you take money out. Bucket #1 is taxable; Bucket
#3 is taxable; and Bucket #2 is _not_ taxable. Like I said above, the
IRS/Congress doesn't want to double dip.

Reporting. If you have an IRA and you've made non-Deductible
contributions, ever, you're _supposed_ to file Form 8606, Nondedutible
IRAs (Contributions, Distributions, and Basis). Chase on over to the IRS
web site and download a copy. Now. I'll wait.

This form does two things:
1. It works out for you what's in Buckets 1, 2, and 3. It's a running
total thing: On line 2, it wants the amounts from previous years, fun.
2. If you had a distribution, based upon what was in Buckets 1, 2, and 3
at the beginning of the year, it figures out how much of that was
taxable (the proportion that was in Buckets 1 and 3) and how much was
not taxable (the proportion that was in Bucket 2). It then has you stick
the appropriate values into the right places in the 1040 forms.

If you've never had a Bucket 2, non-deductible contribution then it's
simple: You don't have to file 8606 and do the math, everything you got
out of your IRA is straight income since it was never taxed before. Full
stop, go on with your life.
If you have had a Bucket #2 situation, then you slap your forehead (like
I did once), go back through your records, find copies of 8606 from the
IRS web site going back 'way too many years, fill out all those forms
starting in the year you made your first non-deductible contribution,
and fill out the forms right on through to the present year. The last
one (using the data from all the previous 8606's) will have the
appropriate basis (what the IRS calls it) and the correct bucket data.
You'll also put in what you had for your distribution this year and
it'll figure out how much income is taxable or non-taxable.

Hope this helps.

KBeck.
 
J

jo

jo said:
11 PM, jo wrote:
First year for Ira withdrawal. Had Fed and State taxes withheld.I
had cash in the Ira to cover it and received a check from my broker
for
the net amount. From reading various solutions online, I understand
that the underlying approach is a split transaction in the receiving
account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount from
the
Ira account to a pseudo account I use for holding undeposited
checks.
I've split the receiving transaction so that the taxes show up in
the
proper [asset] categories and the sum of the taxes offsets the
transferred amount to leave the exact amount of the check I received
in
this holding account. The only part missing is how to get the gross
amount to show up into an income category- Ira distribution,
miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it correctly..
Could use some help. It seems like I need to be able to assigna
category to that transfered amount, but obviously I can't do that
directly. RC?? John?? Anyone?


OK. Calm down.

It's income, but, especially after the broker has taken taxes out, not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has been
earning money. In that case, the sum total cashed out (before taxes)
is
income. Assuming that you're tracking both the IRA and your checking
account in Quicken, you hopefully have your IRA _marked_ as an IRA in
Quicken. (Look under account details on the IRA. Confirm that Quicken
thinks that the tax schedule for transfers out of the IRA are listed
as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that the
broker sent your. However, in order to keep Quicken sane, do a split
on
this transaction. In the split, first line, put down the gross amount
that was created in your IRA account before taxes. On the second line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from the
IRA
to your checking account will show up as IRA income, and that income
will be the total amount, before taxes. The witholding will show upin
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you have,
then
the non-deductable contributions have been taxed in the year that you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions; $2,000
of non-deductable contributions (total of $7,000). Then, a number of
years later after your investments have grown, your IRA is now worth
$10,000. (Growth of another $3,000). You now take out $2,500 as a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you through all
the math, handy especially when you have multiple IRAs all over and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non taxable
portions of IRAs, so it counts it all as income.

KBeck.

Thanks for trying to explain how to do this. Unfortunately it still
isn't
working, but I also varied the procedure a bit and that may be the
cause.
Here's the current situation.
1) I have what you described: a simple IRA with all of it tax
deductible
contributions earning income over the years. The IRA account is
configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the gross
amount from the Ira account to my checking. That seemed like the
logical
way to mimic the actual event. However I cannot then split the
Transfer;
Quicken blocks me.

3) The closest I could come to getting anything correct was to Transfer
each component of the total to my checking: the actual amount received,
and the federal and state tax withheld. That accomplished reducingmy
Ira balance and assigning the withheld taxes to the correct categories,
but I cannot find any place, either in the Tax Planner, or in my P/L
that
the gross amount shows up as income. I really want it to appear in
that
latter, along with all other income. Having it just in the TAx Planner
wouldn't suffice, even if it did work.

What am I missing?

What you are missing is the fact that only the gain on the sale of your
funds is current year income. The original value of the funds sold are
not
current year income. It should have been considered and shown as part of
your gross salary income in the year that you transfer the funds into the
IRA account. In other words, the portion of your salary transferred into
your IRA to buy funds was a payroll deduction, transfer to your IRA
account,
the same as taxes or other payroll deductions, i.e. insurance. The gain
shows in your current year reports as 'RlzdGain'. If the original cost
was
included in current year income, you would be 'double counting'. Once
when
you earned the money that you transferred to the IRA account to buy the
funds and again when you withdraw the funds for the IRA account. Hope
this
solves your problem. In summary, the original cost of the funds was
income
in the year earned and transferred. The gain on the sale of the funds is
income in the year that you withdrew the funds.

Now, hopefully I don't have you completely confused.
I am completely confused :( I can see this is likely going to be a tax
nightmare. I thought this was simple because I fell into your first
scenario: nothing but tax deductible contributions, which meant the gross
withdrawal *was* income this year.

Whatever funds went into this Ira were made decades ago because I had to
retire on disability back in the 1980s. I have absolutely no records of
how anything was accounted for back then but vaguely remember that the
company decided at year end how much they would put in your IRA account,
based on your salary and how well they had done that year (could be a
false memory); I don't remember what my W2s looked like at all but I
wasn't contributing monthly, assuming I was contributing at all. I don't
have my tax returns from back then either, of course, to see how I was
reporting things either. If I was deducting the company contribution (and
they were reporting it on a W2), are we back to the simple situation?

The company was bought out by another, and has recently changed hands
again. I do know some of the people who worked with me back then may be
able to get a little clarification on how things worked, but doubt thatit
will be enough. When I left the company, I rolled the account into another
Ira at Fidelity and there were a few years where I was doing a little
consulting and contributed a small amount to the account. I did deductmy
contribution when I filed tax returns for those years.

Any gains tracked only go back to about 8 years ago, after I stopped
contributing and just let my financial advisor adjust the mix of
investments. There is a cost basis attached to the account,as of the date
she inherited it from Fidelity, but I doubt that's helpful in determining
what proportion of my current year's withdrawal is taxable to me. Thisis
a mess and obviously not a Quicken problem.
Jo,

Relax, relax, relax, breathe, breathe, breathe. Not necessary to worry,
because as described below, you really don't have a problem. Your just
confused about financial income vs. taxable income.

Based on all of your posts, I'm going to make a few assumptions:

1. Your prior years' tax returns were properly prepared either by you ora
competent tax accountant.
2. You do not have the IRS chasing you.
3. You have little accounting or tax knowledge.
3. You are confusing income for financial accounting (Income and Expense
Report in Quicken) with taxable income. These are two completely different
animals.

Now, based on the above, this year you will be taxed on 100% of your IRA
distribution. A regular IRA, not a Roth IRA, always have 100% of the
distribution taxed in the year of withdrawal. You don't need to worry about
any cost basis versus investment earnings for tax purposes. The company
managing your IRA will provide all of the necessary tax documents by the end
of January. Your 2014 tax preparation should not be a problem.

The cost basis is only necessary when selling stock from a brokerage
account. It may also be necessary for Roth IRA's, but since I don't have
one, I'm not sure. To spare anymore confusion, I won't go into an
explanation regarding brokerage or Roth IRA accounts since it isn't part of
you current concern.

From a financial accounting perspective, the only income this year is the
interest or dividends earned this year and any increase in market value
(RlzdGain) on the funds sold to generate the cash distributed.. That's what
will show on a Quicken Income and Expense Report. Remember, the amounts
transferred into you IRA and the interest and dividends from prior years was
reported as income in the year earned.

From a taxable income perspective, you pay tax on 100% of the distribution
because neither the amount you contributed to the IRA nor the interest or
dividends earned were ever taxed. Since 100% is taxed there is no need to
know how much is your original contribution or how much you earned on it or
how much the market value increased. 100% is 100%.

If you have properly entered, into Quicken your contributions, rollovers,
mutual fund purchases, interest and dividends earned and sales and
distributions, you Quicken reports will be properly stated. If not, I can't
help you, nor do I think anyone else can, since you don't have the records.

A point of curiosity. How many years of data do you have in your Quicken
file?

I don't know if I can be of any further help. While I'm a retired Corporate
Accountant, I an not, nor have I ever been a Tax Accountant. I know enough
to accurately prepare my personal tax returns. I purposely stay away from
doing taxes for others because I don't enjoy it nor do I want the
responsibility. I do believe that I understand Quicken and I am comfortable
using the 'interview process' in TurboTax. Maybe R.C. White will jump into
this discussion. He's a retired Public Accountant and has more experiencein
this area then I do.
Richard,

I am not hysterical about this at all, just would like to be able to enter the damn transaction in Quicken so that the withdrawal, withholdings and residual amount all appear in categories/accounts/reports where I want them to.

In your list of assumptions, I would agree with 1 and 2. As for your first 3) I have rather a lot of experience with taxes, having done my own for decades, and helped others to do theirs. I have enough experience with accounting to deal with most situations, but do get confused by some of conceptualdistinctions.

While I have confirmed that the RMD is completely taxable, I still don't know how to enter it in Quicken. While you maintain that it is not income from a financial accounting perspective, it is income from a taxation perspective and I would like it to show up in my personal P & L report in an income category with all my other taxable income. Are you saying that is impossible or just an improper view of the definition of "income" means from a pure accounting perspective?
 
J

jo

Jo,

Sorry I wasn't on to reply over the last few days; busy with work.

Hokay, it's like this.
The money in your IRA is in the following buckets, with the IRA's take
on this:
1. Bucket #1: Money that you put into the IRA in a particular year and
that you _deducted_ on your federal return the year you did that. That's
a "deductable" IRA contribution.
a. Did you pay tax on that money the year you put it into the IRA?
Answer: No. That's the definition of a deductible contribution, you
deducted the income from your tax return _in_ _that_ _year_. An example:
if you put $2000 into your IRA in 1993 and you deducted that from your
taxes in that year, that meant you took your gross income for that year,
knocked off $2000 for the deductible IRA contribution, and the Feds
didn't tax the contribution.
b. When you take that money _out_, later, the Feds want their slice
of it, using the tax rates present during the year you took it out.
(Note: _not_ the tax rates when you put it _in_. That's usually a Good
Thing, since one typically has less income and lower tax rates after one
retires as compared to before.)

2. Bucket #2: Money that you put into the IRA in a particular year and
that you did _not_ deduct from your income in the year that you did
that. This is the definition of a "non-deductible contribution". Yes,
one can do that; heck, I do that. Sometimes it's been when the income
limits in a particular year are such that one _cannot_ make a deductible
contribution (one makes over "yea", whatever "yea" is: Then the IRS
says, "no cookie (deductible contribution) for you!".
a. Did you pay tax on that money in the year you put it into the IRA?
Answer: Yes. You couldn't deduct the IRA contribution from your gross
income. An example: You put in $2000, the IRS said you couldn't deduct
it, so you didn't.
b. When you take that money out later, the IRS says, "You already paid
taxes on that money. We're not taking a second bite of the apple, you
don't have to pay taxes on it again! So don't."

3. Bucket #3: You've got money in your IRA and it's been in there. Value
of the account has gone up over time: Dividends, reinvested Capital
Gains, and (if you're in mutual funds/stocks/bonds etc.) when you sell
those financial instruments, you get more than you paid for them. (Yeah,
capital gains, no kidding.) A simple way to think of it: Whatever's in
that account that's not from Bucket #1 or Bucket #2 is Bucket #3. And,
yes, it is possible that bucket #3 might be _negative_, one can have
capital losses, too.
a) Did you pay any taxes on that increase in value? Answer: No. This is
one of the major reasons that people like to invest in IRAs, even if the
contribution is non-deductible: They grow tax-free.
b) When you take that money out later, the IRS says, "You haven't paid
taxes on that stuff, reinvested dividends/capital gains or just straight
capital gains/losses. You sure as heck are going to be paying taxes on
it now!"

Just to be clear about Bucket #2: Suppose that the limit of a deductible
contribution in a given year is some amount, and you put in more than
that. The amount below the limit is deductible and is going to be taxed
when you take it out; the amount above that limit is non-deductible and
you won't be paying taxes on it when you take it out. Example: Suppose
that in 1995 the limit is $5000. (I don't remember what it was, one can
look it up.) You put in $7000: Then, that year, you get a $5000
deduction on your taxes and 1) a $5000 deductible contribution and 2) a
$2000 non-deductible contribution into your IRA.

At the end of any given year before you start taking money out, the
amounts in Buckets #1 and #2 are fixed and are a sum of the amounts you
put in Buckets #1 and #2 in previous years. The amount in Bucket #3
depends upon how well your investments are doing. At the end of any
given year, the sum of Buckets 1, 2, and 3 _is_ the year-end value of
your IRA. Period.

Now comes the time when you take money out. Bucket #1 is taxable; Bucket
#3 is taxable; and Bucket #2 is _not_ taxable. Like I said above, the
IRS/Congress doesn't want to double dip.

Reporting. If you have an IRA and you've made non-Deductible
contributions, ever, you're _supposed_ to file Form 8606, Nondedutible
IRAs (Contributions, Distributions, and Basis). Chase on over to the IRS
web site and download a copy. Now. I'll wait.

This form does two things:
1. It works out for you what's in Buckets 1, 2, and 3. It's a running
total thing: On line 2, it wants the amounts from previous years, fun.
2. If you had a distribution, based upon what was in Buckets 1, 2, and 3
at the beginning of the year, it figures out how much of that was
taxable (the proportion that was in Buckets 1 and 3) and how much was
not taxable (the proportion that was in Bucket 2). It then has you stick
the appropriate values into the right places in the 1040 forms.

If you've never had a Bucket 2, non-deductible contribution then it's
simple: You don't have to file 8606 and do the math, everything you got
out of your IRA is straight income since it was never taxed before. Full
stop, go on with your life.
If you have had a Bucket #2 situation, then you slap your forehead (like
I did once), go back through your records, find copies of 8606 from the
IRS web site going back 'way too many years, fill out all those forms
starting in the year you made your first non-deductible contribution,
and fill out the forms right on through to the present year. The last
one (using the data from all the previous 8606's) will have the
appropriate basis (what the IRS calls it) and the correct bucket data.
You'll also put in what you had for your distribution this year and
it'll figure out how much income is taxable or non-taxable.

Hope this helps.

KBeck.
Hi Ken,
I appreciate your patience. I have confirmed that I am entirely in the bucket 1 situation. My entire RMD is taxable. My only issue is how to enter this in Quicken to get *my* desired effect. If you read my answer to Richard, you may understand that I may be trying to do something that isn't possible because I want to classify the withdrawal as an income line item. I've played with various split approaches and categories, but nothing completely works. The closest I've come is to do a deposit to the bank accountfor the full amount, assigning that amount to an income category, and splitting out the withheld taxes to separate accounts to arrive at the amount actually deposited in the bank. The only problem is that since there is no source for the deposit, so the Ira account does not reflect any withdrawal.

jo
 
B

Bartt

Hi Ken,
I appreciate your patience. I have confirmed that I am entirely in the bucket 1 situation. My entire RMD is taxable. My only issue is how to enter this in Quicken to get *my* desired effect. If you read my answer to Richard, you may understand that I may be trying to do something that isn'tpossible because I want to classify the withdrawal as an income line item.I've played with various split approaches and categories, but nothing completely works. The closest I've come is to do a deposit to the bank account for the full amount, assigning that amount to an income category, and splitting out the withheld taxes to separate accounts to arrive at the amountactually deposited in the bank. The only problem is that since there is no source for the deposit, so the Ira account does not reflect any withdrawal.

jo
OK, I think this is kind of bouncing all over the place and at the risk of adding yet another voice to the fray, it might be beneficial to specify exactly which Q report(s) you're running. I run Quicken H&B, but I don't use Quicken for my business books. I don't know the details of what the reports under the "Business" node include or exclude. I do know that if I run a Profit and Loss Statement report, it doesn't return any rows.

Also, as John Pollard mentioned on Nov 28, I suspect this will be best handle by assigning a Tax Schedule to the Tranfers In/Out of your IRA Account, if that isn't already done. To verify that, go into Account Edit mode, then click the Tax Schedule button along the bottom edge of the Account Details pop-up. From there, make sure the Transfers drop down has something like"1099-R: Total IRA gross distrib."

If you've done that, I'd next run a Tax Summary report under the Tax node.

For personal tax information, I generally stick with the Tax Summary or TaxSchedule report.
 
R

Richard

jo said:
jo said:
16:16 AM UTC-5, Ken wrote:
On 11/28/2014 3:11 PM, jo wrote:
First year for Ira withdrawal. Had Fed and State taxes withheld.
I
had cash in the Ira to cover it and received a check from my
broker
for
the net amount. From reading various solutions online, I
understand
that the underlying approach is a split transaction in the
receiving
account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount
from
the
Ira account to a pseudo account I use for holding undeposited
checks.
I've split the receiving transaction so that the taxes show up in
the
proper [asset] categories and the sum of the taxes offsets the
transferred amount to leave the exact amount of the check I
received
in
this holding account. The only part missing is how to get the
gross
amount to show up into an income category- Ira distribution,
miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it
correctly.
Could use some help. It seems like I need to be able to assign
a
category to that transfered amount, but obviously I can't do that
directly. RC?? John?? Anyone?


OK. Calm down.

It's income, but, especially after the broker has taken taxes out,
not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has been
earning money. In that case, the sum total cashed out (before
taxes)
is
income. Assuming that you're tracking both the IRA and your
checking
account in Quicken, you hopefully have your IRA _marked_ as an IRA
in
Quicken. (Look under account details on the IRA. Confirm that
Quicken
thinks that the tax schedule for transfers out of the IRA are
listed
as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that
the
broker sent your. However, in order to keep Quicken sane, do a
split
on
this transaction. In the split, first line, put down the gross
amount
that was created in your IRA account before taxes. On the second
line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from
the
IRA
to your checking account will show up as IRA income, and that
income
will be the total amount, before taxes. The witholding will show up
in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you have,
then
the non-deductable contributions have been taxed in the year that
you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get
taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions;
$2,000
of non-deductable contributions (total of $7,000). Then, a number
of
years later after your investments have grown, your IRA is now
worth
$10,000. (Growth of another $3,000). You now take out $2,500 as a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable
income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you through
all
the math, handy especially when you have multiple IRAs all over and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non
taxable
portions of IRAs, so it counts it all as income.

KBeck.

Thanks for trying to explain how to do this. Unfortunately it still
isn't
working, but I also varied the procedure a bit and that may be the
cause.
Here's the current situation.
1) I have what you described: a simple IRA with all of it tax
deductible
contributions earning income over the years. The IRA account is
configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the
gross
amount from the Ira account to my checking. That seemed like the
logical
way to mimic the actual event. However I cannot then split the
Transfer;
Quicken blocks me.

3) The closest I could come to getting anything correct was to
Transfer
each component of the total to my checking: the actual amount
received,
and the federal and state tax withheld. That accomplished reducing
my
Ira balance and assigning the withheld taxes to the correct
categories,
but I cannot find any place, either in the Tax Planner, or in my P/L
that
the gross amount shows up as income. I really want it to appear in
that
latter, along with all other income. Having it just in the TAx
Planner
wouldn't suffice, even if it did work.

What am I missing?

What you are missing is the fact that only the gain on the sale of
your
funds is current year income. The original value of the funds sold are
not
current year income. It should have been considered and shown as part
of
your gross salary income in the year that you transfer the funds into
the
IRA account. In other words, the portion of your salary transferred
into
your IRA to buy funds was a payroll deduction, transfer to your IRA
account,
the same as taxes or other payroll deductions, i.e. insurance. The
gain
shows in your current year reports as 'RlzdGain'. If the original cost
was
included in current year income, you would be 'double counting'. Once
when
you earned the money that you transferred to the IRA account to buy
the
funds and again when you withdraw the funds for the IRA account. Hope
this
solves your problem. In summary, the original cost of the funds was
income
in the year earned and transferred. The gain on the sale of the funds
is
income in the year that you withdrew the funds.

Now, hopefully I don't have you completely confused.
--
Richard

I am completely confused :( I can see this is likely going to be a tax
nightmare. I thought this was simple because I fell into your first
scenario: nothing but tax deductible contributions, which meant the
gross
withdrawal *was* income this year.

Whatever funds went into this Ira were made decades ago because I had
to
retire on disability back in the 1980s. I have absolutely no records
of
how anything was accounted for back then but vaguely remember that the
company decided at year end how much they would put in your IRA
account,
based on your salary and how well they had done that year (could be a
false memory); I don't remember what my W2s looked like at all but I
wasn't contributing monthly, assuming I was contributing at all. I
don't
have my tax returns from back then either, of course, to see how I was
reporting things either. If I was deducting the company contribution
(and
they were reporting it on a W2), are we back to the simple situation?

The company was bought out by another, and has recently changed hands
again. I do know some of the people who worked with me back then may be
able to get a little clarification on how things worked, but doubt that
it
will be enough. When I left the company, I rolled the account into
another
Ira at Fidelity and there were a few years where I was doing a little
consulting and contributed a small amount to the account. I did deduct
my
contribution when I filed tax returns for those years.

Any gains tracked only go back to about 8 years ago, after I stopped
contributing and just let my financial advisor adjust the mix of
investments. There is a cost basis attached to the account,as of the
date
she inherited it from Fidelity, but I doubt that's helpful in
determining
what proportion of my current year's withdrawal is taxable to me. This
is
a mess and obviously not a Quicken problem.
Jo,

Relax, relax, relax, breathe, breathe, breathe. Not necessary to worry,
because as described below, you really don't have a problem. Your just
confused about financial income vs. taxable income.

Based on all of your posts, I'm going to make a few assumptions:

1. Your prior years' tax returns were properly prepared either by you or
a
competent tax accountant.
2. You do not have the IRS chasing you.
3. You have little accounting or tax knowledge.
3. You are confusing income for financial accounting (Income and Expense
Report in Quicken) with taxable income. These are two completely
different
animals.

Now, based on the above, this year you will be taxed on 100% of your IRA
distribution. A regular IRA, not a Roth IRA, always have 100% of the
distribution taxed in the year of withdrawal. You don't need to worry
about
any cost basis versus investment earnings for tax purposes. The company
managing your IRA will provide all of the necessary tax documents by the
end
of January. Your 2014 tax preparation should not be a problem.

The cost basis is only necessary when selling stock from a brokerage
account. It may also be necessary for Roth IRA's, but since I don't have
one, I'm not sure. To spare anymore confusion, I won't go into an
explanation regarding brokerage or Roth IRA accounts since it isn't part
of
you current concern.

From a financial accounting perspective, the only income this year is the
interest or dividends earned this year and any increase in market value
(RlzdGain) on the funds sold to generate the cash distributed.. That's
what
will show on a Quicken Income and Expense Report. Remember, the amounts
transferred into you IRA and the interest and dividends from prior years
was
reported as income in the year earned.

From a taxable income perspective, you pay tax on 100% of the
distribution
because neither the amount you contributed to the IRA nor the interest or
dividends earned were ever taxed. Since 100% is taxed there is no need to
know how much is your original contribution or how much you earned on it
or
how much the market value increased. 100% is 100%.

If you have properly entered, into Quicken your contributions, rollovers,
mutual fund purchases, interest and dividends earned and sales and
distributions, you Quicken reports will be properly stated. If not, I
can't
help you, nor do I think anyone else can, since you don't have the
records.

A point of curiosity. How many years of data do you have in your Quicken
file?

I don't know if I can be of any further help. While I'm a retired
Corporate
Accountant, I an not, nor have I ever been a Tax Accountant. I know
enough
to accurately prepare my personal tax returns. I purposely stay away from
doing taxes for others because I don't enjoy it nor do I want the
responsibility. I do believe that I understand Quicken and I am
comfortable
using the 'interview process' in TurboTax. Maybe R.C. White will jump
into
this discussion. He's a retired Public Accountant and has more experience
in
this area then I do.
Richard,

I am not hysterical about this at all, just would like to be able to enter
the damn transaction in Quicken so that the withdrawal, withholdings and
residual amount all appear in categories/accounts/reports where I want
them to.

In your list of assumptions, I would agree with 1 and 2. As for your first
3) I have rather a lot of experience with taxes, having done my own for
decades, and helped others to do theirs. I have enough experience with
accounting to deal with most situations, but do get confused by some of
conceptual distinctions.

While I have confirmed that the RMD is completely taxable, I still don't
know how to enter it in Quicken. While you maintain that it is not income
from a financial accounting perspective, it is income from a taxation
perspective and I would like it to show up in my personal P & L report in
an income category with all my other taxable income. Are you saying that
is impossible or just an improper view of the definition of "income" means
from a pure accounting perspective?
Jo,

I'm glad to know that at least some of my assumptions were correct. To
answer your question, shown below,

"Are you saying that is impossible or just an improper view of the
definition of "income" means from a pure accounting perspective?"

YES, I'm saying that it is impossible and improper, if done correctly, to
have your RMD show as income in your personal P&L. It, along with any tax
withheld, WILL show in a Tax Summary report under the 1099-R section. This
section also includes any income you received from pension plans. Again, if
done correctly, these numbers should agree with any 1099-R tax documents
that you receive in January from your pension and IRA administrators.

I wish that 'Eternal September' allowed attachments. I would attach
screenshots from Quicken. However, since it does not. I going to upload some
to a website and then post back the links to the screenshots so that you can
visual see what I'm obviously not able to properly explain. Give me a day or
two to get this accomplished and then I'll post back with the appropriate
links. Hopefully these links will clarify the Quicken entry process required
to properly account for a 'traditional IRA" distribution.
 
J

jo

jo said:
16:16 AM UTC-5, Ken wrote:
On 11/28/2014 3:11 PM, jo wrote:
First year for Ira withdrawal. Had Fed and State taxes withheld.
I
had cash in the Ira to cover it and received a check from my
broker
for
the net amount. From reading various solutions online, I
understand
that the underlying approach is a split transaction in the
receiving
account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount
from
the
Ira account to a pseudo account I use for holding undeposited
checks.
I've split the receiving transaction so that the taxes show upin
the
proper [asset] categories and the sum of the taxes offsets the
transferred amount to leave the exact amount of the check I
received
in
this holding account. The only part missing is how to get the
gross
amount to show up into an income category- Ira distribution,
miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it
correctly.
Could use some help. It seems like I need to be able to assign
a
category to that transfered amount, but obviously I can't do that
directly. RC?? John?? Anyone?


OK. Calm down.

It's income, but, especially after the broker has taken taxes out,
not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a time..

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has been
earning money. In that case, the sum total cashed out (before
taxes)
is
income. Assuming that you're tracking both the IRA and your
checking
account in Quicken, you hopefully have your IRA _marked_ as an IRA
in
Quicken. (Look under account details on the IRA. Confirm that
Quicken
thinks that the tax schedule for transfers out of the IRA are
listed
as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that
the
broker sent your. However, in order to keep Quicken sane, do a
split
on
this transaction. In the split, first line, put down the gross
amount
that was created in your IRA account before taxes. On the second
line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from
the
IRA
to your checking account will show up as IRA income, and that
income
will be the total amount, before taxes. The witholding will showup
in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you have,
then
the non-deductable contributions have been taxed in the year that
you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get
taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions;
$2,000
of non-deductable contributions (total of $7,000). Then, a number
of
years later after your investments have grown, your IRA is now
worth
$10,000. (Growth of another $3,000). You now take out $2,500 as a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable
income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you through
all
the math, handy especially when you have multiple IRAs all over and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non
taxable
portions of IRAs, so it counts it all as income.

KBeck.

Thanks for trying to explain how to do this. Unfortunately it still
isn't
working, but I also varied the procedure a bit and that may be the
cause.
Here's the current situation.
1) I have what you described: a simple IRA with all of it tax
deductible
contributions earning income over the years. The IRA account is
configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the
gross
amount from the Ira account to my checking. That seemed like the
logical
way to mimic the actual event. However I cannot then split the
Transfer;
Quicken blocks me.

3) The closest I could come to getting anything correct was to
Transfer
each component of the total to my checking: the actual amount
received,
and the federal and state tax withheld. That accomplished reducing
my
Ira balance and assigning the withheld taxes to the correct
categories,
but I cannot find any place, either in the Tax Planner, or in my P/L
that
the gross amount shows up as income. I really want it to appear in
that
latter, along with all other income. Having it just in the TAx
Planner
wouldn't suffice, even if it did work.

What am I missing?

What you are missing is the fact that only the gain on the sale of
your
funds is current year income. The original value of the funds sold are
not
current year income. It should have been considered and shown as part
of
your gross salary income in the year that you transfer the funds into
the
IRA account. In other words, the portion of your salary transferred
into
your IRA to buy funds was a payroll deduction, transfer to your IRA
account,
the same as taxes or other payroll deductions, i.e. insurance. The
gain
shows in your current year reports as 'RlzdGain'. If the original cost
was
included in current year income, you would be 'double counting'. Once
when
you earned the money that you transferred to the IRA account to buy
the
funds and again when you withdraw the funds for the IRA account. Hope
this
solves your problem. In summary, the original cost of the funds was
income
in the year earned and transferred. The gain on the sale of the funds
is
income in the year that you withdrew the funds.

Now, hopefully I don't have you completely confused.
--
Richard

I am completely confused :( I can see this is likely going to be a tax
nightmare. I thought this was simple because I fell into your first
scenario: nothing but tax deductible contributions, which meant the
gross
withdrawal *was* income this year.

Whatever funds went into this Ira were made decades ago because I had
to
retire on disability back in the 1980s. I have absolutely no records
of
how anything was accounted for back then but vaguely remember that the
company decided at year end how much they would put in your IRA
account,
based on your salary and how well they had done that year (could be a
false memory); I don't remember what my W2s looked like at all but I
wasn't contributing monthly, assuming I was contributing at all. I
don't
have my tax returns from back then either, of course, to see how I was
reporting things either. If I was deducting the company contribution
(and
they were reporting it on a W2), are we back to the simple situation?

The company was bought out by another, and has recently changed hands
again. I do know some of the people who worked with me back then maybe
able to get a little clarification on how things worked, but doubt that
it
will be enough. When I left the company, I rolled the account into
another
Ira at Fidelity and there were a few years where I was doing a little
consulting and contributed a small amount to the account. I did deduct
my
contribution when I filed tax returns for those years.

Any gains tracked only go back to about 8 years ago, after I stopped
contributing and just let my financial advisor adjust the mix of
investments. There is a cost basis attached to the account,as of the
date
she inherited it from Fidelity, but I doubt that's helpful in
determining
what proportion of my current year's withdrawal is taxable to me. This
is
a mess and obviously not a Quicken problem.

Jo,

Relax, relax, relax, breathe, breathe, breathe. Not necessary to worry,
because as described below, you really don't have a problem. Your just
confused about financial income vs. taxable income.

Based on all of your posts, I'm going to make a few assumptions:

1. Your prior years' tax returns were properly prepared either by youor
a
competent tax accountant.
2. You do not have the IRS chasing you.
3. You have little accounting or tax knowledge.
3. You are confusing income for financial accounting (Income and Expense
Report in Quicken) with taxable income. These are two completely
different
animals.

Now, based on the above, this year you will be taxed on 100% of your IRA
distribution. A regular IRA, not a Roth IRA, always have 100% of the
distribution taxed in the year of withdrawal. You don't need to worry
about
any cost basis versus investment earnings for tax purposes. The company
managing your IRA will provide all of the necessary tax documents by the
end
of January. Your 2014 tax preparation should not be a problem.

The cost basis is only necessary when selling stock from a brokerage
account. It may also be necessary for Roth IRA's, but since I don't have
one, I'm not sure. To spare anymore confusion, I won't go into an
explanation regarding brokerage or Roth IRA accounts since it isn't part
of
you current concern.

From a financial accounting perspective, the only income this year is the
interest or dividends earned this year and any increase in market value
(RlzdGain) on the funds sold to generate the cash distributed.. That's
what
will show on a Quicken Income and Expense Report. Remember, the amounts
transferred into you IRA and the interest and dividends from prior years
was
reported as income in the year earned.

From a taxable income perspective, you pay tax on 100% of the
distribution
because neither the amount you contributed to the IRA nor the interestor
dividends earned were ever taxed. Since 100% is taxed there is no needto
know how much is your original contribution or how much you earned on it
or
how much the market value increased. 100% is 100%.

If you have properly entered, into Quicken your contributions, rollovers,
mutual fund purchases, interest and dividends earned and sales and
distributions, you Quicken reports will be properly stated. If not, I
can't
help you, nor do I think anyone else can, since you don't have the
records.

A point of curiosity. How many years of data do you have in your Quicken
file?

I don't know if I can be of any further help. While I'm a retired
Corporate
Accountant, I an not, nor have I ever been a Tax Accountant. I know
enough
to accurately prepare my personal tax returns. I purposely stay away from
doing taxes for others because I don't enjoy it nor do I want the
responsibility. I do believe that I understand Quicken and I am
comfortable
using the 'interview process' in TurboTax. Maybe R.C. White will jump
into
this discussion. He's a retired Public Accountant and has more experience
in
this area then I do.
Richard,

I am not hysterical about this at all, just would like to be able to enter
the damn transaction in Quicken so that the withdrawal, withholdings and
residual amount all appear in categories/accounts/reports where I want
them to.

In your list of assumptions, I would agree with 1 and 2. As for your first
3) I have rather a lot of experience with taxes, having done my own for
decades, and helped others to do theirs. I have enough experience with
accounting to deal with most situations, but do get confused by some of
conceptual distinctions.

While I have confirmed that the RMD is completely taxable, I still don't
know how to enter it in Quicken. While you maintain that it is not income
from a financial accounting perspective, it is income from a taxation
perspective and I would like it to show up in my personal P & L report in
an income category with all my other taxable income. Are you saying that
is impossible or just an improper view of the definition of "income" means
from a pure accounting perspective?
Jo,

I'm glad to know that at least some of my assumptions were correct. To
answer your question, shown below,

"Are you saying that is impossible or just an improper view of the
definition of "income" means from a pure accounting perspective?"

YES, I'm saying that it is impossible and improper, if done correctly, to
have your RMD show as income in your personal P&L. It, along with any tax
withheld, WILL show in a Tax Summary report under the 1099-R section. This
section also includes any income you received from pension plans. Again, if
done correctly, these numbers should agree with any 1099-R tax documents
that you receive in January from your pension and IRA administrators.

I wish that 'Eternal September' allowed attachments. I would attach
screenshots from Quicken. However, since it does not. I going to upload some
to a website and then post back the links to the screenshots so that you can
visual see what I'm obviously not able to properly explain. Give me a dayor
two to get this accomplished and then I'll post back with the appropriate
links. Hopefully these links will clarify the Quicken entry process required
to properly account for a 'traditional IRA" distribution.
Richard,

You don't need to go to the trouble of posting screen shots. If it is impossible to get my personal P/L report to show the RMD as income, I'll have to live with that. I don't care that it is improper from some conceptual perspective to have it shown there, but so be it. I know it is on the Tax Schedule. I know how to get Quicken to account for the withdrawal and withholding. I just wanted what to me is logically income to show on one report.. There are no other complicating considerations, and I have no doubt thatthe RMD will agree with my 1099R.

Thanks so much for sticking with this thread without becoming condescending.. This often happens online when people are having difficulty pinpointing the source of their mental block to a procedure and others get frustrated and assume they are talking to a Quicken illiterate. I'm not, but that doesn't mean that I don't sometimes try to get it to do something that it is notdesigned to do.

Jo
 
J

jo

OK, I think this is kind of bouncing all over the place and at the risk of adding yet another voice to the fray, it might be beneficial to specify exactly which Q report(s) you're running. I run Quicken H&B, but I don't use Quicken for my business books. I don't know the details of what the reports under the "Business" node include or exclude. I do know that if I run a Profit and Loss Statement report, it doesn't return any rows.

Also, as John Pollard mentioned on Nov 28, I suspect this will be best handle by assigning a Tax Schedule to the Tranfers In/Out of your IRA Account, if that isn't already done. To verify that, go into Account Edit mode, then click the Tax Schedule button along the bottom edge of the Account Details pop-up. From there, make sure the Transfers drop down has something like "1099-R: Total IRA gross distrib."

If you've done that, I'd next run a Tax Summary report under the Tax node..

For personal tax information, I generally stick with the Tax Summary or Tax Schedule report.
Hi Bart,

As you may see from my post to Richard, I am surrendering to wanting something that Quicken isn't designed to do. I also have H & B, but no longer use it for any business activity. I just use the Profit and Loss Report for all my personal income and expenses and wanted to view the RMD as income, which may violate some fundamental accounting rule. I don't depend on the Tax Schedule Report when doing my taxes and don't import from Quicken into TTax (what a mess it has made in the past!), but rather use my P/L as a snapshot of all my financial activities during the year. Since I have it set to display two years of data, I get a great comparision of my financial situation from the prior year to the current. I just can't come up with a trick to have my RMD listed as income on this report, but I know it is on theTax Schedule.

Thanks, jo
 
R

Richard

jo said:
jo said:
40:59 AM UTC-5, Richard wrote:
11 PM, jo wrote:
First year for Ira withdrawal. Had Fed and State taxes
withheld.
I
had cash in the Ira to cover it and received a check from my
broker
for
the net amount. From reading various solutions online, I
understand
that the underlying approach is a split transaction in the
receiving
account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount
from
the
Ira account to a pseudo account I use for holding undeposited
checks.
I've split the receiving transaction so that the taxes show up
in
the
proper [asset] categories and the sum of the taxes offsets the
transferred amount to leave the exact amount of the check I
received
in
this holding account. The only part missing is how to get the
gross
amount to show up into an income category- Ira distribution,
miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it
correctly.
Could use some help. It seems like I need to be able to
assign
a
category to that transfered amount, but obviously I can't do
that
directly. RC?? John?? Anyone?


OK. Calm down.

It's income, but, especially after the broker has taken taxes
out,
not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a
time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has
been
earning money. In that case, the sum total cashed out (before
taxes)
is
income. Assuming that you're tracking both the IRA and your
checking
account in Quicken, you hopefully have your IRA _marked_ as an
IRA
in
Quicken. (Look under account details on the IRA. Confirm that
Quicken
thinks that the tax schedule for transfers out of the IRA are
listed
as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that
the
broker sent your. However, in order to keep Quicken sane, do a
split
on
this transaction. In the split, first line, put down the gross
amount
that was created in your IRA account before taxes. On the second
line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from
the
IRA
to your checking account will show up as IRA income, and that
income
will be the total amount, before taxes. The witholding will show
up
in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you
have,
then
the non-deductable contributions have been taxed in the year
that
you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get
taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions;
$2,000
of non-deductable contributions (total of $7,000). Then, a
number
of
years later after your investments have grown, your IRA is now
worth
$10,000. (Growth of another $3,000). You now take out $2,500 as
a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable
income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you
through
all
the math, handy especially when you have multiple IRAs all over
and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non
taxable
portions of IRAs, so it counts it all as income.

KBeck.

Thanks for trying to explain how to do this. Unfortunately it
still
isn't
working, but I also varied the procedure a bit and that may be
the
cause.
Here's the current situation.
1) I have what you described: a simple IRA with all of it tax
deductible
contributions earning income over the years. The IRA account is
configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the
gross
amount from the Ira account to my checking. That seemed like the
logical
way to mimic the actual event. However I cannot then split the
Transfer;
Quicken blocks me.

3) The closest I could come to getting anything correct was to
Transfer
each component of the total to my checking: the actual amount
received,
and the federal and state tax withheld. That accomplished
reducing
my
Ira balance and assigning the withheld taxes to the correct
categories,
but I cannot find any place, either in the Tax Planner, or in my
P/L
that
the gross amount shows up as income. I really want it to appear
in
that
latter, along with all other income. Having it just in the TAx
Planner
wouldn't suffice, even if it did work.

What am I missing?

What you are missing is the fact that only the gain on the sale of
your
funds is current year income. The original value of the funds sold
are
not
current year income. It should have been considered and shown as
part
of
your gross salary income in the year that you transfer the funds
into
the
IRA account. In other words, the portion of your salary transferred
into
your IRA to buy funds was a payroll deduction, transfer to your IRA
account,
the same as taxes or other payroll deductions, i.e. insurance. The
gain
shows in your current year reports as 'RlzdGain'. If the original
cost
was
included in current year income, you would be 'double counting'.
Once
when
you earned the money that you transferred to the IRA account to buy
the
funds and again when you withdraw the funds for the IRA account.
Hope
this
solves your problem. In summary, the original cost of the funds was
income
in the year earned and transferred. The gain on the sale of the
funds
is
income in the year that you withdrew the funds.

Now, hopefully I don't have you completely confused.
--
Richard

I am completely confused :( I can see this is likely going to be a
tax
nightmare. I thought this was simple because I fell into your first
scenario: nothing but tax deductible contributions, which meant the
gross
withdrawal *was* income this year.

Whatever funds went into this Ira were made decades ago because I
had
to
retire on disability back in the 1980s. I have absolutely no
records
of
how anything was accounted for back then but vaguely remember that
the
company decided at year end how much they would put in your IRA
account,
based on your salary and how well they had done that year (could be
a
false memory); I don't remember what my W2s looked like at all but I
wasn't contributing monthly, assuming I was contributing at all. I
don't
have my tax returns from back then either, of course, to see how I
was
reporting things either. If I was deducting the company contribution
(and
they were reporting it on a W2), are we back to the simple
situation?

The company was bought out by another, and has recently changed
hands
again. I do know some of the people who worked with me back then may
be
able to get a little clarification on how things worked, but doubt
that
it
will be enough. When I left the company, I rolled the account into
another
Ira at Fidelity and there were a few years where I was doing a
little
consulting and contributed a small amount to the account. I did
deduct
my
contribution when I filed tax returns for those years.

Any gains tracked only go back to about 8 years ago, after I stopped
contributing and just let my financial advisor adjust the mix of
investments. There is a cost basis attached to the account,as of the
date
she inherited it from Fidelity, but I doubt that's helpful in
determining
what proportion of my current year's withdrawal is taxable to me.
This
is
a mess and obviously not a Quicken problem.

Jo,

Relax, relax, relax, breathe, breathe, breathe. Not necessary to
worry,
because as described below, you really don't have a problem. Your just
confused about financial income vs. taxable income.

Based on all of your posts, I'm going to make a few assumptions:

1. Your prior years' tax returns were properly prepared either by you
or
a
competent tax accountant.
2. You do not have the IRS chasing you.
3. You have little accounting or tax knowledge.
3. You are confusing income for financial accounting (Income and
Expense
Report in Quicken) with taxable income. These are two completely
different
animals.

Now, based on the above, this year you will be taxed on 100% of your
IRA
distribution. A regular IRA, not a Roth IRA, always have 100% of the
distribution taxed in the year of withdrawal. You don't need to worry
about
any cost basis versus investment earnings for tax purposes. The
company
managing your IRA will provide all of the necessary tax documents by
the
end
of January. Your 2014 tax preparation should not be a problem.

The cost basis is only necessary when selling stock from a brokerage
account. It may also be necessary for Roth IRA's, but since I don't
have
one, I'm not sure. To spare anymore confusion, I won't go into an
explanation regarding brokerage or Roth IRA accounts since it isn't
part
of
you current concern.

From a financial accounting perspective, the only income this year is
the
interest or dividends earned this year and any increase in market
value
(RlzdGain) on the funds sold to generate the cash distributed.. That's
what
will show on a Quicken Income and Expense Report. Remember, the
amounts
transferred into you IRA and the interest and dividends from prior
years
was
reported as income in the year earned.

From a taxable income perspective, you pay tax on 100% of the
distribution
because neither the amount you contributed to the IRA nor the interest
or
dividends earned were ever taxed. Since 100% is taxed there is no need
to
know how much is your original contribution or how much you earned on
it
or
how much the market value increased. 100% is 100%.

If you have properly entered, into Quicken your contributions,
rollovers,
mutual fund purchases, interest and dividends earned and sales and
distributions, you Quicken reports will be properly stated. If not, I
can't
help you, nor do I think anyone else can, since you don't have the
records.

A point of curiosity. How many years of data do you have in your
Quicken
file?

I don't know if I can be of any further help. While I'm a retired
Corporate
Accountant, I an not, nor have I ever been a Tax Accountant. I know
enough
to accurately prepare my personal tax returns. I purposely stay away
from
doing taxes for others because I don't enjoy it nor do I want the
responsibility. I do believe that I understand Quicken and I am
comfortable
using the 'interview process' in TurboTax. Maybe R.C. White will jump
into
this discussion. He's a retired Public Accountant and has more
experience
in
this area then I do.

Richard,

I am not hysterical about this at all, just would like to be able to
enter
the damn transaction in Quicken so that the withdrawal, withholdings
and
residual amount all appear in categories/accounts/reports where I want
them to.

In your list of assumptions, I would agree with 1 and 2. As for your
first
3) I have rather a lot of experience with taxes, having done my own for
decades, and helped others to do theirs. I have enough experience with
accounting to deal with most situations, but do get confused by some of
conceptual distinctions.

While I have confirmed that the RMD is completely taxable, I still
don't
know how to enter it in Quicken. While you maintain that it is not
income
from a financial accounting perspective, it is income from a taxation
perspective and I would like it to show up in my personal P & L report
in
an income category with all my other taxable income. Are you saying
that
is impossible or just an improper view of the definition of "income"
means
from a pure accounting perspective?
Jo,

I'm glad to know that at least some of my assumptions were correct. To
answer your question, shown below,

"Are you saying that is impossible or just an improper view of the
definition of "income" means from a pure accounting perspective?"

YES, I'm saying that it is impossible and improper, if done correctly, to
have your RMD show as income in your personal P&L. It, along with any tax
withheld, WILL show in a Tax Summary report under the 1099-R section.
This
section also includes any income you received from pension plans. Again,
if
done correctly, these numbers should agree with any 1099-R tax documents
that you receive in January from your pension and IRA administrators.

I wish that 'Eternal September' allowed attachments. I would attach
screenshots from Quicken. However, since it does not. I going to upload
some
to a website and then post back the links to the screenshots so that you
can
visual see what I'm obviously not able to properly explain. Give me a day
or
two to get this accomplished and then I'll post back with the appropriate
links. Hopefully these links will clarify the Quicken entry process
required
to properly account for a 'traditional IRA" distribution.
Richard,

You don't need to go to the trouble of posting screen shots. If it is
impossible to get my personal P/L report to show the RMD as income, I'll
have to live with that. I don't care that it is improper from some
conceptual perspective to have it shown there, but so be it. I know it is
on the Tax Schedule. I know how to get Quicken to account for the
withdrawal and withholding. I just wanted what to me is logically income
to show on one report. There are no other complicating considerations,
and I have no doubt that the RMD will agree with my 1099R.

Thanks so much for sticking with this thread without becoming
condescending. This often happens online when people are having difficulty
pinpointing the source of their mental block to a procedure and others get
frustrated and assume they are talking to a Quicken illiterate. I'm not,
but that doesn't mean that I don't sometimes try to get it to do something
that it is not designed to do.

Jo
Jo,

Thank you for kind response, much appreciated. I understand your comments
regarding 'mental blocks'. I have them too, but fortunately, not in this
particular situation. One of this days out of the blue, the light will go on
and you'll say to yourself 'Aw $%$@, why didn't I figure that out earlier.
:)

I'll take one last stab at trying to help 'turn on the light'.

Your contributions to the IRA were income in the year that you earned that
money that enabled you to make the contribution. An IRA is a 'TAX DEFERRED'
account, not a 'DEFERRED INCOME' account'.

In a very simplistic view, think about it as taking part of a current
paycheck and putting them into a regular savings account. Those earnings put
into savings were part of salary income in the year earned. All of the
salary shows as income in the P/L report in the year earned. All that was
done was to part of it into a checking account and some into a savings
account. Five years later, funds are withdrawn from the savings account and
placed into the checking account. This transfer does not show as income in
that year because it was five year old income. The same is true for an IRA.
You are just transferring money from one account to another.

The only difference between putting money into savings versus an IRA is that
income tax is paid on the savings upon deposit (i.e. earned), in the case of
the IRA, the income tax is paid upon withdrawal (deferred).

Good luck, I bet the light will go on either before or during the
preparation of your 2014 tax return.
 
Ad

Advertisements

J

jo

jo said:
40:59 AM UTC-5, Richard wrote:
11 PM, jo wrote:
First year for Ira withdrawal. Had Fed and State taxes
withheld.
I
had cash in the Ira to cover it and received a check from my
broker
for
the net amount. From reading various solutions online, I
understand
that the underlying approach is a split transaction in the
receiving
account but didn't grasp everything I read.

I've entered the transaction as a transfer of the gross amount
from
the
Ira account to a pseudo account I use for holding undeposited
checks.
I've split the receiving transaction so that the taxes show up
in
the
proper [asset] categories and the sum of the taxes offsets the
transferred amount to leave the exact amount of the check I
received
in
this holding account. The only part missing is how to get the
gross
amount to show up into an income category- Ira distribution,
miscellaneous, ANYTHING!

i'M sure this is simple, but I'm just not looking at it
correctly.
Could use some help. It seems like I need to be able to
assign
a
category to that transfered amount, but obviously I can't do
that
directly. RC?? John?? Anyone?


OK. Calm down.

It's income, but, especially after the broker has taken taxes
out,
not
all of it may be _taxable_ income. Especially if you've done
non-deductable contributions over time.

You probably know all this, but let's hit it one piece at a
time.

Let's suppose that you have performed nothing but deductable
contributions to your IRA over time. In addition, your IRA has
been
earning money. In that case, the sum total cashed out (before
taxes)
is
income. Assuming that you're tracking both the IRA and your
checking
account in Quicken, you hopefully have your IRA _marked_ as an
IRA
in
Quicken. (Look under account details on the IRA. Confirm that
Quicken
thinks that the tax schedule for transfers out of the IRA are
listed
as
"1099-R: Total IRA taxable distrib.")

Next: In your checking account, do a deposit for the amount that
the
broker sent your. However, in order to keep Quicken sane, do a
split
on
this transaction. In the split, first line, put down the gross
amount
that was created in your IRA account before taxes. On the second
line,
make the category for the negative amount shown as federal tax
witholding, just like your paycheck. (On mine, it's Tax:Fed).

Believe it or not, in the Quicken tax planner, the transfer from
the
IRA
to your checking account will show up as IRA income, and that
income
will be the total amount, before taxes. The witholding will show
up
in
the correct place as money paid to the feds this year.

Where this nifty trick falls on its face is when you've made
non-deductable contributions to the IRA in past years. If you
have,
then
the non-deductable contributions have been taxed in the year
that
you
made them and the _proportion_ _of_ _the_ _distribution_ that is
attributable to those non-deductable contributions doesn't get
taxed
when you take out the money.
Example: Suppose you put in $5,000 of deductable contributions;
$2,000
of non-deductable contributions (total of $7,000). Then, a
number
of
years later after your investments have grown, your IRA is now
worth
$10,000. (Growth of another $3,000). You now take out $2,500 as
a
distribution.
Of that $2,500, $2,500*(5000+3000)/10000 = $2,000 is taxable
income.
$2,500*(2000/10000)=$500 is not taxable income.

The feds have a nifty IRA distribution form that takes you
through
all
the math, handy especially when you have multiple IRAs all over
and
distributions from different IRAs all over.

As far as I know, Quicken doesn't know how to handle the non
taxable
portions of IRAs, so it counts it all as income.

KBeck.

Thanks for trying to explain how to do this. Unfortunately it
still
isn't
working, but I also varied the procedure a bit and that may be
the
cause.
Here's the current situation.
1) I have what you described: a simple IRA with all of it tax
deductible
contributions earning income over the years. The IRA account is
configured as you indicated.

2) My first transaction was not a Deposit,but a Transfer of the
gross
amount from the Ira account to my checking. That seemed like the
logical
way to mimic the actual event. However I cannot then split the
Transfer;
Quicken blocks me.

3) The closest I could come to getting anything correct was to
Transfer
each component of the total to my checking: the actual amount
received,
and the federal and state tax withheld. That accomplished
reducing
my
Ira balance and assigning the withheld taxes to the correct
categories,
but I cannot find any place, either in the Tax Planner, or in my
P/L
that
the gross amount shows up as income. I really want it to appear
in
that
latter, along with all other income. Having it just in the TAx
Planner
wouldn't suffice, even if it did work.

What am I missing?

What you are missing is the fact that only the gain on the sale of
your
funds is current year income. The original value of the funds sold
are
not
current year income. It should have been considered and shown as
part
of
your gross salary income in the year that you transfer the funds
into
the
IRA account. In other words, the portion of your salary transferred
into
your IRA to buy funds was a payroll deduction, transfer to your IRA
account,
the same as taxes or other payroll deductions, i.e. insurance. The
gain
shows in your current year reports as 'RlzdGain'. If the original
cost
was
included in current year income, you would be 'double counting'.
Once
when
you earned the money that you transferred to the IRA account to buy
the
funds and again when you withdraw the funds for the IRA account.
Hope
this
solves your problem. In summary, the original cost of the funds was
income
in the year earned and transferred. The gain on the sale of the
funds
is
income in the year that you withdrew the funds.

Now, hopefully I don't have you completely confused.
--
Richard

I am completely confused :( I can see this is likely going to be a
tax
nightmare. I thought this was simple because I fell into your first
scenario: nothing but tax deductible contributions, which meant the
gross
withdrawal *was* income this year.

Whatever funds went into this Ira were made decades ago because I
had
to
retire on disability back in the 1980s. I have absolutely no
records
of
how anything was accounted for back then but vaguely remember that
the
company decided at year end how much they would put in your IRA
account,
based on your salary and how well they had done that year (could be
a
false memory); I don't remember what my W2s looked like at all but I
wasn't contributing monthly, assuming I was contributing at all. I
don't
have my tax returns from back then either, of course, to see how I
was
reporting things either. If I was deducting the company contribution
(and
they were reporting it on a W2), are we back to the simple
situation?

The company was bought out by another, and has recently changed
hands
again. I do know some of the people who worked with me back then may
be
able to get a little clarification on how things worked, but doubt
that
it
will be enough. When I left the company, I rolled the account into
another
Ira at Fidelity and there were a few years where I was doing a
little
consulting and contributed a small amount to the account. I did
deduct
my
contribution when I filed tax returns for those years.

Any gains tracked only go back to about 8 years ago, after I stopped
contributing and just let my financial advisor adjust the mix of
investments. There is a cost basis attached to the account,as of the
date
she inherited it from Fidelity, but I doubt that's helpful in
determining
what proportion of my current year's withdrawal is taxable to me.
This
is
a mess and obviously not a Quicken problem.

Jo,

Relax, relax, relax, breathe, breathe, breathe. Not necessary to
worry,
because as described below, you really don't have a problem. Your just
confused about financial income vs. taxable income.

Based on all of your posts, I'm going to make a few assumptions:

1. Your prior years' tax returns were properly prepared either by you
or
a
competent tax accountant.
2. You do not have the IRS chasing you.
3. You have little accounting or tax knowledge.
3. You are confusing income for financial accounting (Income and
Expense
Report in Quicken) with taxable income. These are two completely
different
animals.

Now, based on the above, this year you will be taxed on 100% of your
IRA
distribution. A regular IRA, not a Roth IRA, always have 100% of the
distribution taxed in the year of withdrawal. You don't need to worry
about
any cost basis versus investment earnings for tax purposes. The
company
managing your IRA will provide all of the necessary tax documents by
the
end
of January. Your 2014 tax preparation should not be a problem.

The cost basis is only necessary when selling stock from a brokerage
account. It may also be necessary for Roth IRA's, but since I don't
have
one, I'm not sure. To spare anymore confusion, I won't go into an
explanation regarding brokerage or Roth IRA accounts since it isn't
part
of
you current concern.

From a financial accounting perspective, the only income this year is
the
interest or dividends earned this year and any increase in market
value
(RlzdGain) on the funds sold to generate the cash distributed.. That's
what
will show on a Quicken Income and Expense Report. Remember, the
amounts
transferred into you IRA and the interest and dividends from prior
years
was
reported as income in the year earned.

From a taxable income perspective, you pay tax on 100% of the
distribution
because neither the amount you contributed to the IRA nor the interest
or
dividends earned were ever taxed. Since 100% is taxed there is no need
to
know how much is your original contribution or how much you earned on
it
or
how much the market value increased. 100% is 100%.

If you have properly entered, into Quicken your contributions,
rollovers,
mutual fund purchases, interest and dividends earned and sales and
distributions, you Quicken reports will be properly stated. If not, I
can't
help you, nor do I think anyone else can, since you don't have the
records.

A point of curiosity. How many years of data do you have in your
Quicken
file?

I don't know if I can be of any further help. While I'm a retired
Corporate
Accountant, I an not, nor have I ever been a Tax Accountant. I know
enough
to accurately prepare my personal tax returns. I purposely stay away
from
doing taxes for others because I don't enjoy it nor do I want the
responsibility. I do believe that I understand Quicken and I am
comfortable
using the 'interview process' in TurboTax. Maybe R.C. White will jump
into
this discussion. He's a retired Public Accountant and has more
experience
in
this area then I do.

Richard,

I am not hysterical about this at all, just would like to be able to
enter
the damn transaction in Quicken so that the withdrawal, withholdings
and
residual amount all appear in categories/accounts/reports where I want
them to.

In your list of assumptions, I would agree with 1 and 2. As for your
first
3) I have rather a lot of experience with taxes, having done my own for
decades, and helped others to do theirs. I have enough experience with
accounting to deal with most situations, but do get confused by some of
conceptual distinctions.

While I have confirmed that the RMD is completely taxable, I still
don't
know how to enter it in Quicken. While you maintain that it is not
income
from a financial accounting perspective, it is income from a taxation
perspective and I would like it to show up in my personal P & L report
in
an income category with all my other taxable income. Are you saying
that
is impossible or just an improper view of the definition of "income"
means
from a pure accounting perspective?


Jo,

I'm glad to know that at least some of my assumptions were correct. To
answer your question, shown below,

"Are you saying that is impossible or just an improper view of the
definition of "income" means from a pure accounting perspective?"

YES, I'm saying that it is impossible and improper, if done correctly, to
have your RMD show as income in your personal P&L. It, along with any tax
withheld, WILL show in a Tax Summary report under the 1099-R section.
This
section also includes any income you received from pension plans. Again,
if
done correctly, these numbers should agree with any 1099-R tax documents
that you receive in January from your pension and IRA administrators.

I wish that 'Eternal September' allowed attachments. I would attach
screenshots from Quicken. However, since it does not. I going to upload
some
to a website and then post back the links to the screenshots so that you
can
visual see what I'm obviously not able to properly explain. Give me a day
or
two to get this accomplished and then I'll post back with the appropriate
links. Hopefully these links will clarify the Quicken entry process
required
to properly account for a 'traditional IRA" distribution.
Richard,

You don't need to go to the trouble of posting screen shots. If it is
impossible to get my personal P/L report to show the RMD as income, I'll
have to live with that. I don't care that it is improper from some
conceptual perspective to have it shown there, but so be it. I know it is
on the Tax Schedule. I know how to get Quicken to account for the
withdrawal and withholding. I just wanted what to me is logically income
to show on one report. There are no other complicating considerations,
and I have no doubt that the RMD will agree with my 1099R.

Thanks so much for sticking with this thread without becoming
condescending. This often happens online when people are having difficulty
pinpointing the source of their mental block to a procedure and others get
frustrated and assume they are talking to a Quicken illiterate. I'm not,
but that doesn't mean that I don't sometimes try to get it to do something
that it is not designed to do.

Jo
Jo,

Thank you for kind response, much appreciated. I understand your comments
regarding 'mental blocks'. I have them too, but fortunately, not in this
particular situation. One of this days out of the blue, the light will go on
and you'll say to yourself 'Aw $%$@, why didn't I figure that out earlier.
:)

I'll take one last stab at trying to help 'turn on the light'.

Your contributions to the IRA were income in the year that you earned that
money that enabled you to make the contribution. An IRA is a 'TAX DEFERRED'
account, not a 'DEFERRED INCOME' account'.

In a very simplistic view, think about it as taking part of a current
paycheck and putting them into a regular savings account. Those earnings put
into savings were part of salary income in the year earned. All of the
salary shows as income in the P/L report in the year earned. All that was
done was to part of it into a checking account and some into a savings
account. Five years later, funds are withdrawn from the savings account and
placed into the checking account. This transfer does not show as income in
that year because it was five year old income. The same is true for an IRA.
You are just transferring money from one account to another.

The only difference between putting money into savings versus an IRA is that
income tax is paid on the savings upon deposit (i.e. earned), in the case of
the IRA, the income tax is paid upon withdrawal (deferred).

Good luck, I bet the light will go on either before or during the
preparation of your 2014 tax return.
richard,

I think the light started to go on yesterday and was further brightened by your explanation. !

jo
 

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