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Level 1

Distribution Code 7D for 1099-R form. Is this taxable?

My grandma got a form 1099-R. Box 1 Gross Distribution and Box 2a Taxable Amount have the same amount $25,000. Distribution code is 7D. Nothing else in other boxes. She's single, 70 years old and hasn't filed taxes for years and her only other income is $9,000 from social security. Is she going to be taxed on the $25,000? I'm reading up on distribution code D that non qualified annuities may be subject to 3.8% additional tax under IRC 1411 if income exceed certain thresholds in her case $200,000. So does this mean she doesn't have to worry about paying taxes because her income is way below the threshold? Or does she need to pay taxes because $25,000 is in Box 2a as Taxable Amount?


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Level 11

Distribution Code 7D for 1099-R form. Is this taxable?

It’s taxable, and she needs to file a tax return, because of box 2a. It’s just not subject to the extra 3.8% tax because her income is low. But,  it’s a high enough amount that some of her social security will become taxable.

 

Social security only becomes taxable when added to sufficient other income. If you are otherwise required to file a tax return, you do need to enter it in Turbotax (TT). TT will determine the taxable portion.

Social security (including SSDI) becomes taxable when your income, including 1/2 your social security, reaches:

Married Filing Jointly(MFJ): $32,000

Single or head of household: $25,000


2 Replies
Level 11

Distribution Code 7D for 1099-R form. Is this taxable?

It’s taxable, and she needs to file a tax return, because of box 2a. It’s just not subject to the extra 3.8% tax because her income is low. But,  it’s a high enough amount that some of her social security will become taxable.

 

Social security only becomes taxable when added to sufficient other income. If you are otherwise required to file a tax return, you do need to enter it in Turbotax (TT). TT will determine the taxable portion.

Social security (including SSDI) becomes taxable when your income, including 1/2 your social security, reaches:

Married Filing Jointly(MFJ): $32,000

Single or head of household: $25,000


Level 1

Distribution Code 7D for 1099-R form. Is this taxable?

Hal_Al, thanks a lot for the speedy and well thought response.