IRS Says I owe money - shows 11k in a ded IRA being show as non ded

[Samsam]

Hey All,

I just got some mail from the IRS for my 2015 tax return.  I had put money into Roth IRAs for my wife and me and then when doing taxes realized it could be deductible.  So sometime in Feb of 2016 I had those re-characterized.  I filled this out in the "extra" info lines in turbo tax.  Does vanguard not send in the 5498 that get filed later in May the next year to show the re-characterizations?

It says, "shown on return" 11k, then as corrected by IRS - 0, difference 11k. This 11k then makes my taxable income go up and shows that I owe with interest over 1800. I'm hoping all that I have to do is send them the 5498 and show that I did put 11k into a trad ira (from a roth ira).

[DavidAnnArbor]

Shouldn't TurboTax customer support tell you what forms you should send to the IRS ?

[Samsam]

I'm going to try calling them too, but I filled it out as recharacterized from roth ira to trad ira.  Just wondering if this has happened to anyone else to see where the break in the chain is!

[DavidAnnArbor]

I did the same thing in 2016 for the 2016 tax year, I recharacterized from a Roth to a tIRA, and Vanguard sent me a 1099-R which was included in my 2016 tax return. I included the 6500 tIRA deduction on line 32 of the 1040.
Did you get a 1099-R from Vanguard ?

[Samsam]

I did the same thing in 2016 for the 2016 tax year, I recharacterized from a Roth to a tIRA, and Vanguard sent me a 1099-R which was included in my 2016 tax return. I included the 6500 tIRA deduction on line 32 of the 1040.
Did you get a 1099-R from Vanguard ?

I got one for 2016...I'm looking to see if they gave me one for the 2015 tax year though....I can see my rechar in transaction history...

[Samsam]

When I go to Vanguard > Tax Center it does not show any 1099 for tax year 2015, there are just 5498 that came out later, May 2016

2016 has the 1099... but it looks like that was for the 2015 numbers

[DavidAnnArbor]

So I guess I don't understand. Did you do a recharacterization (Roth to tIRA)  for both 2015 tax year, and again for the 2016 tax year? 

[Samsam]

Yes I did.  The 1099 that shows in the "2016 Tax year" is actually for the 2015 recharacterization....what a mess!

I'm hoping to call Vanguard on Tues and see what they say, if I always rechar the following year before taxes are due that means that the docs don't show up for a year...

[DavidAnnArbor]

Yes the 1099-R is the main thing, so in theory you should have one for 2015 tax year and again for 2016 tax year.
In theory you can do an amended tax return for 2015 if Vanguard actually did the recharacterization like they were supposed to.

[startbyservingothers]

Hopefully you can get this resolved quickly enough that the following advice isn't needed:

Anytime you have a dispute with the IRS, send in the amount that they ask.  NONE of the paperwork makes it clear that you can do this while still contesting the charges.

- I sent in the full payment to the address requested,  I included a note that I was prepaying the amounts and had mailed in a dispute.

-  I sent a dispute to the dispute address and noted that I had prepaid the amounts pending our resolution.

-  The IRS send me a letter agreeing to my dispute which I had to sign and return.  (Yes even though they agreed to everything I disputed, I still had to sign a document that I was in agreement with the new resolution.)   IRS sent a refund check for the amount that was due to me. 

Some people thing "With-holding a payment"  can sometimes be used at leverage.  However in my opinion the opposite is true with the IRS.  Once you've submitted payment and have stopped fees from accruing they become very focused on getting the case closed. 

-  In my case, I never met, or spoke to an IRS agent through the whole process.  I filed the dispute, they agreed, case closed.

[Samsam]

Hopefully you can get this resolved quickly enough that the following advice isn't needed:

Anytime you have a dispute with the IRS, send in the amount that they ask.  NONE of the paperwork makes it clear that you can do this while still contesting the charges.

- I sent in the full payment to the address requested,  I included a note that I was prepaying the amounts and had mailed in a dispute.

-  I sent a dispute to the dispute address and noted that I had prepaid the amounts pending our resolution.

-  The IRS send me a letter agreeing to my dispute which I had to sign and return.  (Yes even though they agreed to everything I disputed, I still had to sign a document that I was in agreement with the new resolution.)   IRS sent a refund check for the amount that was due to me. 

Some people thing "With-holding a payment"  can sometimes be used at leverage.  However in my opinion the opposite is true with the IRS.  Once you've submitted payment and have stopped fees from accruing they become very focused on getting the case closed. 

-  In my case, I never met, or spoke to an IRS agent through the whole process.  I filed the dispute, they agreed, case closed.

Oh boy I will be surely pissed off if this is the case (interest accruing even though I have responded).  I faxed in my documentation showing that I did in fact rechar. roth monies into trad ira - and that it can be deductible.  I also called in a week after I faxed it and asked them if this meant it changed the date of our resolution and they said it did, I would get a new deadline if we had to go back and forth again.  Now I'm worried though! I will call in next week to see if someone has gotten to the dispute, all I know is that the paperwork has been filed for the case.  Depending how this goes if this happens again or takes way too long I may just put in the money even though I'm 99% sure that I don't owe anything.