Solved: Are all income on 1099R taxable even if the whole amount was used to construct our main residential house?
cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
New Member

Are all income on 1099R taxable even if the whole amount was used to construct our main residential house?

 
1 Best answer

Accepted Solutions
Highlighted
Level 13

Are all income on 1099R taxable even if the whole amount was used to construct our main residential house?

Unfortunately, yes, it is all taxable (but see below).

Income reported on 1099-R is largely or totally tax-deferred. Therefore, when you take a distribution from your retirement plan as reported on the 1099-R, it is normally taxable.

Note that qualified plans in which you have a basis do not tax the basis when returned, but this is usually only a small amount of the distribution and has nothing to do with what you used the distribution for.

You may be thinking of the exception to a penalty for an early distribution from certain retirement plans. If you took the distribution early (for most taxpayers, before you were 59 1/2), you would be subject to a 10% penalty on top of paying income tax on the distribution.

However, if your distribution was from an IRA or similar plan (but NOT from a 401(k) or other employer plan), then you could escape the penalty on the first $10,000 of the distribution ($20,000 if married filing joint) if you were a qualified first-time homebuyer. See IRS Publication 590-B to see if you qualify.


View solution in original post

1 Reply
Highlighted
Level 13

Are all income on 1099R taxable even if the whole amount was used to construct our main residential house?

Unfortunately, yes, it is all taxable (but see below).

Income reported on 1099-R is largely or totally tax-deferred. Therefore, when you take a distribution from your retirement plan as reported on the 1099-R, it is normally taxable.

Note that qualified plans in which you have a basis do not tax the basis when returned, but this is usually only a small amount of the distribution and has nothing to do with what you used the distribution for.

You may be thinking of the exception to a penalty for an early distribution from certain retirement plans. If you took the distribution early (for most taxpayers, before you were 59 1/2), you would be subject to a 10% penalty on top of paying income tax on the distribution.

However, if your distribution was from an IRA or similar plan (but NOT from a 401(k) or other employer plan), then you could escape the penalty on the first $10,000 of the distribution ($20,000 if married filing joint) if you were a qualified first-time homebuyer. See IRS Publication 590-B to see if you qualify.


View solution in original post

Privacy Settings