Retirement tax questions
The Simplified Method option generally applies when you receive a 1099-R and there is not a "taxable amount" shown in box 2a of Form 1099-R.
If you previously contributed amounts to your pension or annuity plan that were included in your gross income, you can exclude some of your distribution from your income. You can calculate the tax-free part using the "General Rule" or the "Simplified Method." Please see IRS Topic 411 for more information.
In order for TurboTax to calculate the taxable portion of your distribution using the Simplified Method, you must provide some information. Please see the steps below on where to enter this information:
- Click on Wages & Income at the top of the screen and scroll down to Retirement Plans and Social Security and click Show More
- Click on Start or Revisit next to IRA, 401(k), Pension Plan Withdrawals (1099-R) and click Edit next to your 1099-R entry.
- Click Continue and answer the questions until you get to Tell Us the Taxable Amount Method and then select "Simplified Method" if it is not already selected. Click Continue.
- Enter the information in the "Enter Annuity Information" section. See the tips to complete this section and the screenshot below:
Annuity Start Date: The first day of the period for which you receive payment under the contract
Plan Cost: See box 9b on your Form 1099-R
Number of Months Received: 12 if you received payments for the whole year
Tax-Free Amt Previously Recovered: If this is not the first year of your pension distribution and you computed part of your distribution in past years as being nontaxable, you must enter an amount here.
Death Benefit Exclusion: If you are the beneficiary of a deceased employee or former employee, you may qualify for an exclusion
5. Next enter your age when you started receiving the annuity or pension and select Continue.
6. The program will calculate the taxable amount of your 1099-R.
