1099-R EARLY DISTRIBUTION

Forum|Forum|6 years ago
February 22, 2020
1 reply
12 views

I have entered my 1099-r into turbo tax i had taxes withheld from this distribution at the time it was taken to cover the penalty. But after entering it turbo tax is still telling me i owe the same amount in taxes i have already paid or the 10% penalty. Put it simple i put in that i paid 109 in taxes for the distribution on the 1099-r but after the walk though it tells me i owe 109 in additional taxes but i have already paid the 109. why would i need to pay 20% for this distribution..

SteamTrain

Level 15

The software just tells you there is a 10% penalty...and one is calculated on your tax return.

The withholding already done, and that you entered in box 4 of the 1099-R form, will be applied as a credit against that penalty, and any other taxes you may owe for the early withdrawal,, or even any other taxes you may owe too.

So it balances out properly. That's the way it is supposed to work.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

Brian7771

Level 2

I have taken a early pay out from my Pension plan of $37,565.96 received $30,052.77 after $7,513.19 was taken out for Fed taxes (Box4).

Turbo tax is saying that I owe $3,756 (10%)

on form 1099-R (Box4) $7,513.19 (20%)(already taken out)

that is a total of $11,270.19 (30%)

It seems that Turbo tax is not seeing what has already been taken out ! It is showing in the Fed Tax Due box

$3981 in red (due). Why is this ? Needing some help here .....

SteamTrain

Level 15

@Brian7771

You are thinking about this wrong.

1) Your tax return takes ALL your income from everywhere, including that 1099-R, and calculates a tax on ALL of it at whatever rates are appropriate for everything together , includes the penalty, and puts that amount on line 16 of the 1040.

2) Then it takes ALL your withholding...from every source, (including box 4 on your 1099-R) and puts all your withholding on line 17 of the form 1040...adds in a few other possible credits to get line 19....which includes ALL your credits.

3) The difference between these two is your refund...or balance due . So you ARE getting credit for having prepaid some of your taxes paid with that 1099-R because the $$ in box 4 of your 1099-R are included in line 19's value on the 1040.

Your tax return is the final Full-Year tax accounting for Everything..,.not just one form.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*