1099-R

[weatherstone]

In 2019, I entered distribution amounts from (2) 1099-R along with Federal tax withheld on the form. The amounts entered appear on the final tax return. The IRS is now saying that the amount entered should have been reported as Wages and is fully taxable. They have sent a deficiency notice. I reviewed the return and everything seems to be entered correctly. Any idea what may be going on?

[rjs]

On your 2019 Form 1040, what are the exact amounts on lines 4a, 4b, 4c, and 4d?

Please answer the following questions separately for each 1099-R.

• What are the exact amounts in boxes 1 and 2a?
• Is "Taxable amount not determined" checked in box 2b?
• What is the distribution code in box 7?
• Is the IRA/SEP/SIMPLE box checked?

[weatherstone]

4a. Blank

4b. 0

4c. 204885

4d. 38431

Form (1)                                  Form(2)

1. 173431.13                          1. 31453.83

2a. 173431.13                        2a. 31453.83

2b. BLANK                               2b. BLANK

4. 34686.22                             4.  0

Distribution: 7                         Distribution: M7

IRA SEP Box Blank                  IRA SEP Box Blank

[rjs]

The amount on Form 1040 line 4c is correct. It's not clear why only $38,431 of the total distribution is shown as taxable on line 4d.

Do you know why the full amount is not treated as taxable?

On the Form 1040 is there any notation to the left of the amount on line 4c or 4d, such as PSO or ROLLOVER?

Did you roll over part of the distribution to another retirement plan of any kind?

Is there an amount in box 5 or box 9b on either 1099-R? If so, what are the exact amounts?

What kind of plans are the distribution from? Is it a regular pension, from which you received monthly payments? Or is it a lump-sum distribution? Is "Total distribution" checked in box 2b on either 1099-R?

Are both 1099-R forms from the same plan?

Is 2019 the first year that you received distributions from either plan?

Did you receive these distributions because you retired, or for another reason? If you retired, in what year did you retire and begin receiving distributions?

[weatherstone]

The amount on Form 1040 line 4c is correct. It's not clear why only $38,431 of the total distribution is shown as taxable on line 4d.

Do you know why the full amount is not treated as taxable? No. I retired and left employment after I was 59-1/2.

On the Form 1040 is there any notation to the left of the amount on line 4c or 4d, such as PSO or ROLLOVER? When I print out the form, it does say ROLLOVER, but I did not input that.

Did you roll over part of the distribution to another retirement plan of any kind? No- I used the funds to purchased a new home due to my wife's disability.

Is there an amount in box 5 or box 9b on either 1099-R? If so, what are the exact amounts? Both boxes (5) and (9b) on both forms state $0.00.

What kind of plans are the distribution from? Is it a regular pension, from which you received monthly payments? Or is it a lump-sum distribution? Is "Total distribution" checked in box 2b on either 1099-R? Lump-sum distribution; Neither form has box 2b checked- blank.

Are both 1099-R forms from the same plan? Yes. Vanguard.

Is 2019 the first year that you received distributions from either plan? Yes.

Did you receive these distributions because you retired, or for another reason? If you retired, in what year did you retire and begin receiving distributions? Retired 07/2019- Age > 59-1/2

[Mike9241]

do you have basis in the plan? if so form 8606 should be in your return. 

[rjs]

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@weatherstone wrote:

When I print out the form, it does say ROLLOVER, but I did not input that.

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You might not have entered the word "rollover," but you must have entered something that made TurboTax treat it as a rollover. TurboTax does not decide on its own that it was a rollover, and there is nothing on your 1099-R forms to indicate a rollover. You might have said that you moved part of the money to another retirement account.

If you still have the 2019 TurboTax software installed, I suggest that you review your entries. Be careful not to change anything. Don't save the tax return after you review it. Better yet, make a copy of the .tax2019 file and use the copy for your review.