Taxable income left blank is common. Your Code 3 is disability so part of your income will be treated similar to wages because you have employer paid disability benefits. This makes you eligible for earned income credit and child tax credit. The part after your birthday is pension. Since you have a form that covers 2 different things, here are the options:
- If you have children - age 17 and under on your tax return and qualify for those credits, it would be worth splitting your form and entering the disability as one form and the pension as another form, each having the relevant parts and portion of income.*
- If you don't have kids- just enter the one form as-is.
Since you have reached the minimum retirement age, your disability is converted to pension/ annuity. You have box 9 - this will determine the taxable portion. You and the program will use the Simplified Method Worksheet. The questions are asked after you enter the 1099-R.
Let me explain box 5 and box 9.
- Box 5 is health insurance premiums you paid with after tax dollars plus your nontaxable portion of the benefit. (If you know your health premiums, you can determine the nontaxable amount for this year on your own - no need).
- Box 9 is how much you paid in over the years working. The program then uses a factor based on your age to determine the % of box 9 that is non-taxable.
Be sure you answer all the questions after you enter the 1099-R to get the correct taxable amount. Be sure to mark that you reached minimum retirement age!
Next, look at your tax return.
Income reporting:
- If you enter the disability separately, it will go on 1040 line 1 wages.
- If you let it all be pension, 1040 box 5a is the total distribution, box 5b is the taxable amount.
*If you do have children and need help with breaking things up, reply back. It isn't common but I thought it was worth mentioning.
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