Taxable amount on 1099-R distribution

Forum|Forum|6 years ago
January 31, 2020
2 replies
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On the 1099-R I just received from an my annuity company the Taxable amount (Box 2a) is much less than the Gross distribution amount (Box 1). Also, box 5 shows the amount of difference between the gross and taxable amounts. When I enter these amounts in Turbo Tax it is still showing that the taxable amount for income tax purposes is the higher amount in the Gross distribution box. My annuity company told me that the smaller amount in the taxable amount box is what I owe. This is because most of what was distributed to me in 2019 was out of my cost basis not the earnings from my investment. Why is TT still showing the gross amount instead of the taxable amount for income tax purposes?

Best answer by SusanY1

From the information given, I can't tell for sure where you see the information but I imagine you see it on the Income Summary screen. This screen in TurboTax doesn't reflect the taxable amount but the gross amount (Box1).

The screen is a quick check screen to verify the documents entered.

TurboTax is still picking up the correct taxable amount that you are reporting in 2a for your tax return and will transfer it to the proper line on your tax return.

Here is a way that you can verify that it is working properly:

Log in to your tax return at TurboTax.com.
Click on Tax Tools on the left side of the screen (you may need to click on Continue in the center first).
Click on Tools.
In the box that pops up in the center, click on View Tax Summary.
On the left menu, click on Preview my 1040.
Scroll down to Line 4, where you should see that your total distribution and the taxable amount will show on 4a/4b (or 4c/4d).

SusanY1Answer

The screen is a quick check screen to verify the documents entered.

TurboTax is still picking up the correct taxable amount that you are reporting in 2a for your tax return and will transfer it to the proper line on your tax return.

Here is a way that you can verify that it is working properly:

Log in to your tax return at TurboTax.com.
Click on Tax Tools on the left side of the screen (you may need to click on Continue in the center first).
Click on Tools.
In the box that pops up in the center, click on View Tax Summary.
On the left menu, click on Preview my 1040.
Scroll down to Line 4, where you should see that your total distribution and the taxable amount will show on 4a/4b (or 4c/4d).

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Bcaffrey

I have entered the amount of the gross dist for an inherited ira rmd($2964). The total amount is not taxable because some of the contributions were after tax (46%). The 1099 r shows taxable amount not determined. How do I get the correct taxable amount to 1040?

dmertz

Employee

When entering a code 4 Form 1099-R with the IRA/SEP/SIMPLE box marked you must calculate the taxable amount yourself outside of TurboTax, then enter the result when TurboTax asks for it. Generally you should use a separate Form 8606 to do this calculation, mark this Form 8606 as being for calculating the taxable amount of the distribution from the inherited IRA (to distinguish it from Forms 8606 that TurboTax automatically generates for Taxpayer and Spouse's own IRAs) and include it with your mailed tax return.

dmertz

Employee

mdames, it's likely that you are misinterpreting what TurboTax is showing you. With the correct taxable amount in box 2a and the investment in the contract that is nontaxable shown in box 5, it's unlikely that TurboTax would include the entire box 1 amount on Form 1040 line 4d unless you made an entry error. Check your Form 1040 to see that the entire box 1 amount is included on line 4c but only the taxable amount from box 2a is on line 4d.

If the full box 1 amount is being included on line 4d, it's likely that you mistakenly marked the IRA/SEP/SIMPLE box on TurboTax's 1099-R form for this distribution. The code D that you indicated in another post is accompanying the code 7 indicates that the distribution is not from an IRA and must not have the IRA/SEP/SIMPLE box marked.

Also make sure that you have not allowed TurboTax to use the Simplified Method to determine the taxable amount. If you did, delete the 1099-R form from TurboTax and reenter it.