1099R form from OPM - Taxable Amount

[dmaylman71]

Sirs,

I am retired from the Postal Service. My 1099-R in Box 2a - Taxable amount is listed as unknown. This started when my gross annuity was reduced by 4335.06 to be paid to my ex-wife. Am I required to put an amount in that box and if so how do I determine the correct amount. Do I subtract the amount sent to my wife from my gross distribution amount and use that as the taxable amount?

Thank you in advance for your help.

[ThomasM125]

Box 2(a) on a form 1099-R is completed by the pension company that issued the form. Normally, you shouldn't enter anything there if the field was left blank by the issuer.

The taxable amount of your pension should be determined by the codes and other amounts entered on it and by answering the questions that TurboTax asks after you enter that information.

[dmaylman71]

Prior to last year, there was a taxable amount in box 2a. Last year they finally started taking out a court-ordered annuity for my ex-wife. Last year and this year the taxable amount in 2a says Unknown. Last year I left it like that. This year if I leave that empty my refund jumps up by 4000.00 dollars plus. If I put in the same amount that is in Box 1 there is no change to my refund of 4000.00 plus. I work for the Postal Service for 33 years. My payment comes from OPM. It states in numerous places that there is a Simplified Method for figuring out the amount that is taxable. There does not seem to be anything simple about it. I guess I don't understand why I have to figure out what amount is taxable.  Thank you.

[npierson7]

You don't have to figure out the amount. The fact that the Box 2a is blank on your Form 1099-R does not mean you'll be taxed om the whole amount of your distribution. It could or could not be taxable, it depends on the distribution codes and other factors, like your gross income, filing status etc. Please, don't enter anything to that field if it is blank on your form, it will creates errors in your tax return. 

[dmertz]

Because box 2b Taxable amount not determined is marked, you must calculate and enter the taxable amount yourself.

If in the past box 2a had the same amount as was in box 1, the box 2a amount on this Form 1099-R should be the same as the amount in box 1.

Otherwise, the amount in boxes 2a and 5 should generally be reduced from the amounts shown in past years by the same proportion as the amount in box 1 was reduced.  However, you'll also need to determine when all of your original investment in the contract has been paid back to you.  Once that has happened, everything else reported in box 1 of the Form 1099-R for the year in which this happens and all future Forms 1099-R will be taxable.

You can use the Simplified Method to come up with the same results, but it would require some modification due to the splitting of the annuity.  You would have to reduce by the same proportion as your reduction in payments the amounts representing your investment in the contract and the amount previously received.

I would use the Simplified Method to do the calculation for your tax return and use the first method I suggested to verify that you made the correct entries for the Simplified Method.

Your ex-wife will need to do the same when dealing with her Form 1099-R from this annuity.  The sum of her results and your results should be the same as what you previous Forms 1099-Rs showed.