Why is the Refund Amount Changing When I Enter a Rollover Distribution?

Another thing we’re seeing with some regularity… folks entering Form 1099-R to report a distribution from a 401(k) or some other pension plan into an IRA are seeing their refunds go down (or taxes due go up) in the Refund Monitor when they enter the 1099-R… even when it’s a rollover!

Rollovers aren’t taxable as everyone knows… but here’s what’s happening: when you start your entry of the 1099-R, and enter box 1 as the gross distribution, then enter box 2 as taxable distribution, that taxable distribution will immediately cause the behind-the-scenes calculations to run and your refund or tax due in the Monitor will change right away.

As you progress down the form and enter the distribution code "G" (rollover), you’ll see that Refund Monitor change back to where it was before you made the box 2 entry!

So… it’s just a timing thing!