If there is a code 3 in box 7 on yiur 1099-R form AND you are under the minimum age that you could have retired if you were still working for the company, then the distribution goes on line 1 as wages.
The tax is the same as it would be if it were on line 5, but it is an advantage to you to be on line 1 - it can qualify you for the EIC, or allow IRA contributions that would not be allowed if on line 5.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
