For Form 1099-R, the taxable amount box 2a is blank, box 2b is checked, box 4 has an amount withheld (not blank). After completing the entry per the 1099-R, the question is asked to Describe the Taxable Amount. Yes amount in box 2a was used as the taxable amount, or No a different amount was taxable.
Just because Box 2 does not have an amount, it does not mean that is non-taxable. On occasion, the issuer does not know the exact amount, possibly because it was transferred from one broker to another. If you had employee contributions (Box 5) , you could potentially calculate a smaller taxable amount.
The Simplified Method Worksheet is generated automatically, once you have entered 1099-R information into Turbo Tax and answered follow up questions.
Please enter the form into the program exactly as it appears on the form and continue through the interview. You will be asked questions about your contributions and Simplified Method calculations.
The "plan cost at annuity start date" refers to your total after-tax contributions in the plan, if you made any. If you did not make any after-tax contributions into these accounts, enter "0" (zero) in the plan cost entry.
If you did make after-tax contributions and have a 1099-R, it may be listed in box 9b. If the information is not listed there, you must find it in your records or contact your annuity administrator. It will be beneficial to find this information, as it may reduce your taxable income
Please do not ignore the questions, as the answers will provide additional prompts about annuity cost and start date, which will then determine the correct taxable amount.
If you made any after-tax contributions to your pension/annuity plan, you can exclude part of your pension/annuity from taxable income. Generally, you must figure the tax-free part when the first payments begin.
To determine how much of your pension is taxable and how much is tax free, you must use:
a. Simplified Method
*you must use it if your annuity/pension starting date was after July1, 1986, or
* Your annuity starting date was after November 18, 1996, and both of the following apply: 1. The payments are from a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity, and 2. On your annuity starting date, either you were under age 75 or the number of years of guaranteed payments was fewer than 5.
b. General Rule – used if you don’t qualify for Simplified Method
Note: Your contributions are reflected in box 5, Form 1099-R. You may contact your plan administrator, if you are unsure of your pension/ annuity start date