The taxable amount is calculated for you, based on your form's entries and follow up questions.
First, let's make sure that the form is entered correctly, not as a regular pension.
Please follow the steps below to enter CSA 1099-R.
1. Federal Taxes
2. Wages & Income, Jump to Full list
3. Scroll down and select IRA, 401(k), Pension Plans. On the screen Tell Us Which 1099-R you Have please be sure to select CSA-1099-R Civil Service survivor annuity (if you are survivor, but not the original owner). Select Continue and you will see automatically filled in information on OPM. Select Continue again and you will see Enter Annuity Information screen. You will be prompted to data entry and additional questions about your annuity.
Second, please be sure that the Form 1099-R is entered into Turbo Tax exactly as it appears (all fields, including the contributions); don't change any boxes, if they are blank or have "zeros" in them, please leave the fields in Turbo Tax blank. This will ensure proper calculation of the taxable amount.
OPM violates the 1099-R rules by writing "helpful" information in the box rather than just the value or code like they are supposed to. OPM has done that for years and it causes more confusion than help. They put UNKNOWN in box 2a when it should be blank, and put "7 NONDISABILITY" in box 7 when is should only be "7", "1" or "2".
The taxable amount in box 2a is usually the box 1 amount unless you have after-tax contributions in the retirement plan and use the simplified method. If this is NOT the first year of receiving payments, then you should use the same method that was used last year - either the box 1 amount of the simplified method, using the carry forward simplified information from last year.
If box 2a is blank or UNKNOWN then there should be amount in box 9b to use with the simplified method. If no amount in 9b then contact OPM to find the account "basis".
Enter a 1099-R here:
Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).
OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.
Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.
[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]
The taxable amount is calculated for you, based on your form's entries and follow up questions.
First, let's make sure that the form is entered correctly, not as a regular pension.
Please follow the steps below to enter CSA 1099-R.
1. Federal Taxes
2. Wages & Income, Jump to Full list
3. Scroll down and select IRA, 401(k), Pension Plans. On the screen Tell Us Which 1099-R you Have please be sure to select CSA-1099-R Civil Service survivor annuity (if you are survivor, but not the original owner). Select Continue and you will see automatically filled in information on OPM. Select Continue again and you will see Enter Annuity Information screen. You will be prompted to data entry and additional questions about your annuity.
Second, please be sure that the Form 1099-R is entered into Turbo Tax exactly as it appears (all fields, including the contributions); don't change any boxes, if they are blank or have "zeros" in them, please leave the fields in Turbo Tax blank. This will ensure proper calculation of the taxable amount.
I made the mistake of entering the non taxable amount in Box 2. How do I get back into my Turbo Tax to correct this error.
If you receive an additional payment purchased by voluntary contributions (amount is listed at the bottom of CSA 1099R), realize that the amount listed in 9b ONLY includes your contributions for your regular annuity, not the voluntary contributions you made for the additional annuity. If you don't , you're paying taxes again on all of your additional annuity.
The posted answer is very complete but does not match my copy of Turbo Tax Home and Business and I am still struggling with my original question.
The form that I received for OPM is form CSF 1099R.
The Box 1 entry is $2460
The Box 2 entry is UNKNOWN
The Box 3 entry is NONE
The Box 7 entry is 4 - DEATH - BENEFIT
The Box 9b entry is 2730.69
My question is " is the Box 1 Gross distribution taxable or is it treated as a non-taxable survivor benefit?"
I will appreciate the assistance.
Box 1 is taxable unless you enter a corrected amount in box 2a. The IRS instructions state "Generally, you must enter the taxable amount in box 2a."
If the annuity was purchased with after-tax funds, then it’s non-qualified. Non-qualified annuities require tax payments on only the earnings.
The amount of taxes on non-qualified annuities is determined by something called the exclusion ratio. The exclusion ratio is used to determine what percentage of annuity income payments is taxable and how much is not. The idea is to determine the amount of a withdrawal or payment from an annuity is from the already-taxed principal and how much is considered taxable earnings.
Exclusion Ratio Example
OPM violates the 1099-R rules by writing "helpful" information in the box rather than just the value or code like they are supposed to. OPM has done that for years and it causes more confusion than help. They put UNKNOWN in box 2a when it should be blank, and put "7 NONDISABILITY" in box 7 when is should only be "7", "1" or "2".
The taxable amount in box 2a is usually the box 1 amount unless you have after-tax contributions in the retirement plan and use the simplified method. If this is NOT the first year of receiving payments, then you should use the same method that was used last year - either the box 1 amount of the simplified method, using the carry forward simplified information from last year.
If box 2a is blank or UNKNOWN then there should be amount in box 9b to use with the simplified method. If no amount in 9b then contact OPM to find the account "basis".
Enter a 1099-R here:
Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).
OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.
Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.
[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]
@ChampChiranand anybody else who wants to chime in.
I have gotten here by the rabbit hole.
My 2017 box 2a states unknown. So that means the Simplified method for a 12 month time frame. I even created a spread sheet for the next two years.
But my 2016 OPM 1099-r states the starting date of 06/01/2016. The box 2a has an amount in it. So I assumed the Simplified method starts in 2017 with no previous year recovery amount (0) for line 6.
But my concern is the later 6 months of 2016. If the box 2a has an amount am I to assume that 2016 is not included in the Simplified method worksheet and that box2a taxable amount is already correct?
I assume that the blank amount in box2a triggered the Simplified Method in TurboTax?
I hope I made this clear. I could have started a new question but it ties in here so clearly.
Thank you in advance.
I would really like to finish up at a decent hour. 8-)
@phyzx wrote:
@ChampChiranand anybody else who wants to chime in.
I have gotten here by the rabbit hole.
My 2017 box 2a states unknown. So that means the Simplified method for a 12 month time frame. I even created a spread sheet for the next two years.
But my 2016 OPM 1099-r states the starting date of 06/01/2016. The box 2a has an amount in it. So I assumed the Simplified method starts in 2017 with no previous year recovery amount (0) for line 6.
But my concern is the later 6 months of 2016. If the box 2a has an amount am I to assume that 2016 is not included in the Simplified method worksheet and that box2a taxable amount is already correct?
I assume that the blank amount in box2a triggered the Simplified Method in TurboTax?
I hope I made this clear. I could have started a new question but it ties in here so clearly.
Thank you in advance.
I would really like to finish up at a decent hour. 8-)
I suggest that you discuss this with the pension department at OPM. The simplified method is used to recover the tax free contributions that you made and are part of every monthly payment. If you have an unrecovered after-tax "basis" then you should have used the simplified method starting with the very first payment. You should ask them why the 2016 had a taxable amount and 2017 does not (it might have something to do with a part year pension, but only OPM can tell you their rules). They should also be able to tell you what start date to use.
See IRS Pub 971page 5 for information.
https://www.irs.gov/pub/irs-pdf/p721.pdf
I contact OPM and get this repeated dribble.
If your annuity started after July 2, 1986, a portion of each annuity payment is taxable and a portion is a tax-free return of your contributions to the retirement fund. Your retirement contributions are shown on the 1099R form we send you each January for tax filing purposes.
To assist you in determining the tax-free portion of your annuity, the Internal Revenue Service (IRS) offers Publication 721, "Tax Guide to U.S. Civil Service Retirement Benefits". This publication is available at https://www.irs.gov/pub/irs-pdf/p721.pdf
This info is what I read before that sent me down this rabbit hole. This is not an adequate answer.
The search for an I.R.S. and O.P.M. knowledgeable person is now underfoot. If anybody has links I would appreciate.
You need to actually talk to someone at OPM who can access your account and look up and figure out what that amount on your 1099-R should be and issue a revised 1099-R if necessary.
I actually used the simplified method worksheet to validate the entries into TurboTax from 2016 to 2019 and the calculations worked out well. So these are the entries I made and filed. I amended 2017 - 2019 taxes as the 2016 1099-r was correct. The annuity started 2017/01/02.
Given the exclusion rule (which I am aware of), and given that block 2a on the OMB 1099R reads "UNKNOWN", how does the TurboTax user exclude the exclusion amount from taxable income? Are you saying subtract it from the amount in block 1 and enter the reduced amount in 2a of the form provided by TurboTax even though the paper form reads "UNKNOWN"?
I have calculated and excluded it myself in the past - but only on the form 1040. I haven't used TurboTax in the past...
@macuser_22 Forget my question. I figured it out. But for anyone else confused as to how to get to the simplified method:
When Turbotax asks if the amount in block 1 of the OPM 1099R is "the taxable amount" the user has to select "No". I selected "yes" :(. Don't know for how many of you this was the problem but if you select "no" then it asks if you want to use the simplified method.
HOWEVER - despite that the 1099R reads "UNKNOWN" in block 2a, TurboTax won't allow that entry. Instead, it won't allow letters and, if you leave it blank, it computes that NONE of block 1 is taxable! I got to this point on my first pass. I'm not sure why at some point I selected that the amount in block 1 was the taxable amount but it might be because of the result of my first pass.
Turbotax wasn't helping to let me know anything here and I might have let them tax the entire block 1 amount if I wasn't already aware that it wasn't fully taxable. The software should let the user enter what the block reads and, if it reads "UNKNOWN" the software should be programmed to guide the user to compute the taxable amount. To me this an issue and a Turbotax failure. How are you "guaranteeing" the max refund when you let the user tax their entire payout here because you won't let the user enter what block 2a commonly reads?
If your 1099-R has UNKNOWN as the taxable amount, you probably have a CSA 1099-R. If you have not indicated that this is a CSA form, go back into TurboTax in the 1099-R section and enter your CSA 1099-R, making sure to indicate before you enter the form that it is a CSA 1099-R. Then leave the taxable amount box blank and TurboTax will guide you through the interview to determine the taxable amount. Make sure to delete the incorrect 1099-R.
Either way, if Box 2a reads unknown, leave it blank and TurboTax will provide you with follow-up questions. Anyhow, if you are using Turbo Tax Online, when you get to the following screen, here is where you will make the selection. Be sure to pick the image in green.