1099-R Taxable amount different on TT calcs

[JohnML]

I am a medically retired Peace Officer in CA.  my 1099-R has 42k line 1 entry and 2900 in line 2a.  

On my return, TT has calculated that 31k is taxable.  Is this correct?

[Critter-3]

Did you enter the 1099-R as written on the form ?  Was the box 2b checked ?  I would delete the 1099-R and reenter it manually  and do not check box 2b this time ... that way the program will accept the taxable 2a amount. 

[JohnML]

I entered. exactly as shown.  No boxes checked in 2b and 3,4,5 are 0.00

[DoninGA]

What is the code in box 7 of the Form 1099-R?

[Critter-3]

Delete and reenter the form again ... carefully read the questions in that section at the end ... this is a qualified plan and all of the distributions are RMDs.  

[dmertz]

It's odd that the Form 1099-R would have only $2,900 in box 2a when there is $0 in box 5 (unless the Form 1099-R has code 8, P or E in box 7, although with any of these codes there is no way to cause TurboTax to determine the taxable amount to be anything other than the amount in box 2a).  I would expect this Form 1099-R to have the amounts in boxes 2a and 5 that sum to the $42,000 in box 1.  I would ask the payer how they determined that less then the full amount is taxable and why the difference is not present in box 5.

[JohnML]

3

[DoninGA]

When you entered the Form 1099-R and were presented with the follow-up questions did you indicate that you were a Public Safety Officer when asked by the program?  If so then the program would have only entered your taxable income from the 1099-R on Line 1h of the form 1040.

IRS Form 1040 page 28 instructions - https://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=28

If you are retired on disability and reporting your disability pension on line 1h, include only the taxable amount on that line and enter “PSO” and the amount excluded on the dotted line next to line 1h.

[JohnML]

I just looked back at all of my previous returns (via TT) and all have reported the correct taxable amount, prior to this year.  I have deleted and re-entered the 1099 R amounts but get the same 1090, line 5b entry........  I don't enter it on line 1 because it is reported on the 1099-R.  Should I wipe out the 1099-R and enter the amounts on line 1 with those notes as to Gross and Taxable?  Will that not flag an audit because of the 1099 reporting by the State of CA?

[dmertz]

The taxable amount of disability income received before normal retirement age for the plan is properly reported on line 1h of Form 1040, not on line 5b.  Only if you are over the normal retirement age for the plan should the gross amount be included on line 5a and the taxable amount be included on line 5b.

Are you sure that the $31,000 (or $28,100 of the $31,000 if you are over the normal retirement age for the plan) on line 5b isn't coming from some other Form 1099-R?  I'm unable to cause TurboTax to treat as taxable any more than $2,900 of the Form 1099-R that you describe.  Make sure that you are not telling TurboTax to use the Simplified Method for calculating the taxable amount.  If TurboTax asks, you should be telling TurboTax that the amount in box 2a is the correct taxable amount.

The PSO question in TurboTax is asked only to determine if TurboTax needs to ask if any of the gross amount (up to $3,000) was taken out by the plan for your health insurance.  The amount that went to health insurance reduces the taxable amount that would otherwise be on line 5b or line 1h, but not below zero.