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posted Jan 15, 2021 1:27:09 AM

Do we need to file if our only source of taxable income is from a 72T SEPP distribution and is below $11k?

I am a disabled Veteran and receive VA compensation which I am told is not taxable.  This has been my situation for the past 4 years and I have filed a return each year always with the exact same numbers.  It seems like a waste of time for the IRS to process a return that doesn't benefit anyone.  Thank you in advance for sharing your expertise.

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1 Replies
Level 15
Jan 15, 2021 5:07:08 AM

Unless the Form 1099-R has code 2 in box 7, you are required to file Form 5329 claiming the SEPP exception to the early-distribution penalty, otherwise the IRS will assess the penalty.  You can file Form 5329 stand-alone if you don't need to file Form 1040 for any other reason, just complete, sign and mail Form 5329.  If you instead choose to e-file using TurboTax, TurboTax will include Form 1040 in addition to Form 5329.

 

https://www.irs.gov/pub/irs-pdf/f5329.pdf

https://www.irs.gov/pub/irs-pdf/i5329.pdf