Question

OPM Pension taxable amount

Forum|Forum|6 years ago
February 5, 2020
1 reply
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I receive an OPM pension and there are different figures in the gross distribution and the taxable amount. This is due to the amount of my pension received deducts a certain amount each year which was part of my employee contributions. When turbo tax is computing my tax, it is not using the taxable amount which is lower. Why?

TurboTax Home & Biz Windows

B

BillM223

Go back to the 1099-R interview and do this:

Enter the 1099-R, including box 2a.

Skip through the next screens until you are asked if this is a qualified plan. Enter that it is qualified plan (but see this OPM page).

On the screen that asks about periodic payments, answer "yes" (this was not a one-time payment, was it?).

Answer "yes" or "no" on the next screen, depending on whether you started the pension this year or not.

On the next screen, if you answered "no", it will ask you if the amount in box 2a was used as the taxable amount - answer "yes", if that is the amount of the distribution less the basis. (remember the return of basis is spread out over the life of the pension).

If the next screen is because you answered "yes" to the first year question, then probably the box 2a amount has been entered in "I will specify an amount". If not, then put the box 2a amount there.

Look at your 1040 - the box 1 amount on your 1099-R will be in line 4c, while the box 2a amount will be in line 4d.

Note that there may be other pension amounts which are included in these lines.

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W

warren_compton

Box 2a on my 1099-R contains the text "UNKNOWN"

I used 1040-SR on TT and it places my correct income on Box 4c, but 0.00 for taxable income in Box 4d

I cashed out of the minimum required distribution for a thrift fund at age 70.5 years and so RMD section was not included. This also results in a zero income tax for my California return according to TT.

Too good to be true?

LindaB1993

You are correct that an adjustment is necessary. I recommend revisiting the input of the Form 1099-R. There are a series of questions that will prompt the calculation of the taxable amount.

Describe the taxable amount.
Was the amount shown in the taxable annuity box the taxable amount?
The answer should be "No, a different amount was taxable.
Then it will ask for the taxable method.. "It defaults to the Simplified method"
Then when you enter the starting date, plan cost, etc, the program determines the amount that is tax free and taxable.

If your annuity starting date was between July 1, 1986, and November 19, 1996, you were able to elect to use the Simplified Method or the General Rule. This choice is irrevocable and applied to all later annuity payments.

The following are qualified plans.