Having taxes withheld from IRA withdrawals at Vanguard.

[Time2]

I made two withdrawals in March and April of 2023. I had taxes withheld amounting to $8,400. I received a letter from the IRS saying I owed $9,525 (tax, penalties and interest), turbotax says I should have received a $406 refund. So I went through my Turbo tax for 2023 and I see where I did add the $8400 as tax payments, (Maybe the wrong place to put taxes withheld by a brokerage?). The IRS doesn't seem to have notice of or received the taxes that Vanguard withheld. Has anyone had a problem with Vanguard not notifying the IRS of tax withholdings and where would I find this tax (if paid) on the IRS.gov website?

 

[Sunset]

You should have received a form from Vanguard about the taxes withheld. Check online for the tax statements and it should be there. I think you would enter the amount withheld in the same place as you enter the IRA amounts in TT for the 1099. I use H&R so could be slightly off.

 

[OldShooter]

Our Schwab 1099s show the withheld amounts and we just put that in our H&R Block tax return input data just like we transfer the other numbers from the 1099s. Nothing special or difficult about it.

 

[Sunset]

What does the IRS letter say was your income, it should match pretty well with what you said, and be missing tax paid
OR
they think your income was a lot higher than what you entered.

I know when I do taxes, I save multiple copies of my return.. like myTaxes1, myTaxes2, etc, so I can revert back if the file goes bad. I have to be careful not to send in the wrong one

 

[Time2]

What does the IRS letter say was your income, it should match pretty well with what you said, and be missing tax paid
OR
they think your income was a lot higher than what you entered.

Income is correct, they say I didn't pay enough in taxes, but they don't show the $8,400 Vanguard withheld. After looking at Vanguard tax forms, I see I have two 1099R forms one for my accounts that the IRS credited me for and one for my wife which the IRS is unaware of.

 

[cathy63]

You need to find/download your Vanguard 1099-R form(s). There will be one for each IRA from which you took a withdrawal. When you enter the data in TurboTax, you have to give it the payer info (Vanguard's EIN, name and address), and then you enter the numbers from boxes 1, 2a and 4 on the form so that TTax can put everything in the right places on your 1040. Box 4 of the 1099-R is the withholding. If you filed a paper return then you would attach a copy of the 1099-R and any other forms that show withholding when you mail it in. If you e-filed via TurboTax, then you need to enter the proper EIN in order for the IRS to match things up.

To verify that the numbers on your return match the numbers the IRS got from other sources, you can pull a wage and income transcript at irs.gov. You probably need to create an id.me account if you don't already have one in order to login.

 

[cathy63]

Income is correct they say I didn't pay enough in taxes, but they don't have the $8,400 Vanguard with held.

Reply to the letter and send a photocopy of the 1099-Rs from Vanguard showing the withholding. There should be a reply form on the last page that you need to include when you send in your response.

 

[Dtail]

Our Schwab 1099s show the withheld amounts and we just put that in our H&R Block tax return input data just like we transfer the other numbers from the 1099s. Nothing special or difficult about it.

Same with Fidelity

 

[cathy63]

Same with Fidelity

And all other IRA custodians. They're required to issue 1099-Rs and report withholding to the IRS.

 

[Texas Proud]

If you forgot to put in your DWs 1099 then you need to amend your return adding that... which will include the withholding...

My question would be why would you just put in withholding on your own that is NOT on a tax form?

 

[Gumby]

If you forgot to put in your DWs 1099 then you need to amend your return adding that... which will include the withholding...

My question would be why would you just put in withholding on your own that is NOT on a tax form?

Indeed. That's the only reason you have to attach form 1099R to your tax return - to prove the withholding. If it doesn't show withholding, you don't need to attach the 1099R.

 

[HI Bill]

Reply to the letter and send a photocopy of the 1099-Rs from Vanguard showing the withholding. There should be a reply form on the last page that you need to include when you send in your response.

I think the OP will have to file and amended return....they seem to have left a 1099-R out.

 

[Time2]

The OP thinks you are right! Thanks all.

 

[jazz4cash]

I see I have two 1099R forms one for my accounts that the IRS credited me for and one for my wife which the IRS is unaware of.

Unaware? Can someone confirm this? I thought IRS receives 1099R data directly from the payer. When you efile the 1099R form is not attached. It does seem that the IRS process is sketchy for matching up 1099 data to what is claimed on the return.

 

[Time2]

Unaware, might be the wrong way to say it. I did not show the taxes deducted on line 4 of the '1099R Deductions from Pensions and IRAs' form. I had the form just not not complete. They didn't match it up.

 

[sengsational]

It would seem to me if you keyed-in the data from the 1099-R into the tax software, including the right EIN, then there's nothing to amend; I would not do an amended return. If you did an electronic return, the IRS would not require a paper copy of the 1099-R, and if the paper return instructions don't say to include the 1099-R, then you would not be out of compliance.

I'd just write a letter saying "the IRS made a mistake by not including the 1099-R data that I included on my return" and wait (and wait and wait) for the letter where they finally see the withholding. In the meantime, they'll probably send you more repeated demands, so send your letter with signature confirmation.