You are correct that an adjustment is necessary. I recommend revisiting the input of the Form 1099-R. There are a series of questions that will prompt the calculation of the taxable amount.
- Describe the taxable amount.
- Was the amount shown in the taxable annuity box the taxable amount?
- The answer should be "No, a different amount was taxable.
- Then it will ask for the taxable method.. "It defaults to the Simplified method"
- Then when you enter the starting date, plan cost, etc, the program determines the amount that is tax free and taxable.
If your annuity starting date was between July 1, 1986, and November 19, 1996, you were able to elect to use the Simplified Method or the General Rule. This choice is irrevocable and applied to all later annuity payments.
The following are qualified plans.
-
A qualified employee plan.
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A qualified employee annuity.
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A tax-sheltered annuity (TSA) plan or contract.
For more detailed information, please review IRS Pub.939
https://www.irs.gov/publications/p939
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