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Level 1
posted Aug 27, 2020 11:13:43 AM

Form 5329: on 1099-Q, why doesn't line 5 show the gross distribution, line 6 show the basis, and line 7 the amount taxable?

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1 Replies
Level 15
Aug 27, 2020 12:04:09 PM

Form 5329 is used to calculate the 10% non qualified distribution penalty. It is not used to calculate the taxable portion of the distribution. In fact, there is no IRS form for calculating the taxable portion.  TurboTax only has a work sheet for that.

The lines from form 5329:

5. Distributions included in income (the taxable portion)m from a Coverdell ESA, a QTP, or an ABLE account (TurboTax will get this number from the worksheet and line 8 of Schedule 1) 
6. Distributions included on line 5 that are not subject to the additional tax (see instructions) 
7. Amount subject to additional tax (10% penalty). Subtract line 6 from line 5 .