I received a death benefit from my father in 2019. When I started my taxes I found the original 1099-R was incorrect. I received the new 1099-R yesterday with a letter attached stating the following:
"There was $XX,XXX.XX of COST BASIS left in this contract. According to Internal Revenue Code Section 72(b) (3), you as beneficiary may take a deduction on your income tax return Form 1040, Schedule A for the remaining investment in the contract."
I researched this wording in Turbo Tax, Help Discussions, Etc. and found nothing relating to this situation. Can someone assist me on where I should input this information on my tax return? Or does it go on my return, or should I contact the Payer back and have that balance transferred to my checking account?
First of all, calculate the tax implications the corrected 1099-R form has on your tax return.
Unless you itemize your deductions on Schedule A, you may not need to take the Schedule A deduction for the remaining investment in the contract.
Contact the Payer if you have any other questions about money you're owed.