1099-R for my wife (Texas Teachers Retirement)

[bryce_in_tx]

I am putting the info from it into Turbotax and the program is asking me questions I don't recall ever being asked before.  The state of Texas determines how much of her pension is taxable and how much is tax free.  We don't use the simplified method or the general rule to calculate the tax free amount, ourselves.  The state of Texas determines that and it's reported on the 1099 each year. 

This year Turbotax is asking me the annuity start date, the plan cost, the tax free amount previously recovered, and the death benefit exclusion.  All questions I don't see the point in since the state of Texas tells us what is tax free and what is taxable on the 1099.  And I don't recall the program has ever asked us for this information before this year.   If every Texas teacher has to answer these questions, I can see the state getting inundated with emails and telephone calls each year.  Does anyone understand what is going on? I don't.  I can't get past this part of doing the taxes without answering the questions.  Any help? I don't believe the questions are necessary.  I don't need turbotax to calculate the tax free portion.   The state of Texas has already done that and reported it on the 1099.  Thanks for any help. 

[mesquitebean]

@ dmertz 

Can you please assist here when you are next in the forum?  This user also has some additional information posted in another thread (linked below) where you assisted other users, where he says it is a 403(b).  Thanks!

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/why-are-there-new-annuity-questi...

[SteamTrain]

@mesquitebean    I'm pretty sure I have the answer. The problem is apparently due to a massive error in the follow-up questions, that TTX hasn't fixed yet...or refuses to admit they screwed up.

@bryce_in_tx 

Unfortunately, the question in the interview, just before it DUMPED you into the Simplified vs General procedure, is misleading for your situation...

If your box 2a has a non-zero number in it..(not blank, nor marked as undetermined), and that number is somewhat lower than the box 1 number, due to an after-tax contribution amount that is noted in box 5...then edit that retirement form again, and when you get to the following page (below), answer it as-if the displayed edits were present  (i.e. you needed to answer YES).  

Answering YES will use the box 2a $$ amount on your for 1040.  Check lines 5a and 5b before and after entering that 1099-R. 

 (But if you answered No, and already entered some date or $$ in the "General" or "Simplified" calculation area ,you might need to delete your 1099-R first and re-enter it from scratch...not sure of that though).

______________________________________

[bryce_in_tx]

Thanks for the reply!

Yes, the amount in Box 1 (Gross distribution) is larger than the Box 2a amount (Taxable amount).  Each monthly payment, the State of Texas took out $200 to $300 from her salary as a retirement contribution.  This occurred from the start of her employment to the end, so that she did have a cost, to her retirement plan, which she had made.    That's why the Gross distribution is greater than the taxable amount.   And that's why there is an amount in Box 5 (Employee contribution).  Her 1099-R has no Box 5a or 5b.  Box 7 has a "7" in it.  The IRA/SEP/SIMPLE box is not checked, Boxes 8 (Other), 9a (Your percentage of total distribution) and 9b (Total employee contribution) are all blank. Nothing in them. 

So, i should answer the question "Yes" that asks if Box 1 and 2a are the same, even though they aren't?  Strange, very strange.  If I get audited, I'll be suing Turbotax for defective software.  Not that I expect that since the employee contribution amount is immaterial to the Gross Distribution amount. 

I am relying on your post, btw, for this part of the tax return.  Not that I'll hold you accountable for any mistakes.  Thanks for the help. 

Retired Corp Accountant

[SteamTrain]

@bryce_in_tx 

The 5a and 5b tat some folks may refer to are not the boxes on the 1099-R, but are the line numbers on your form 1040.  IF it goes thru properly, line 5b on the 1040 will be lower than line 5a by the difference between boxes 1 and 2a on that 1099-R.     Of course, line 5a and 5b may include other 1099-R dollars so it may take some adding up to figure what the numbers are actually coming from.

[SteamTrain]

@bryce_in_tx 

You are actually answering YES, that box 2a was the taxable amount...either this year, or also prior years.

The edits in my picture are to match the text TTX used in the 2024 software....and the actions taken by the software, when answering Yes or No, match what it did last year...even though they (my opinion) foolishly  changed the text....and should not have done so (again, my opinion)

[bryce_in_tx]

Well, the wording this year is highly confusing.  It says "For the years my wife received these distributions, was the total amount shown in the form the same as the amount you paid tax on?".   I assumed, perhaps incorrectly, it was referring to Box 1 as the "total amount".  Since the taxable amount shown in each year's 1099-R was less than the Gross or Total Distribution, I assumed the answer to the question would be "NO", rather than "YES".  I'd have to do some study on retirement plans to really understand what it's asking.   That defeats the purpose of tax software, doesn't it? 

Somebody please tell Turbotax management this wording needs to be made crystal clear.  I worked for two public companies in both junior and high level accounting positions, as well as two years for Jackson Hewitt, the last year as an assistant manager.  I understand taxes pretty well and can interpret IRS regulations pretty well, as well as FASB standards.  I didn't fall off the turnip truck yesterday.   TTX does themselves a disservice by not correcting this error.  While we're all human and we all make errors, correcting them is the moral thing to do.  Thanks again for your help. It is very much appreciated. 

[RogerD1]

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