I received a letter from IRS stating did not report 1099r code 7 but I did not took any distribution nor received an 1099r. What Should I do?

[SweetieJean]

Which tax year?
Did you do a rollover or Roth conversion?

[macuser_22]

Call the IRS on the number in the letter and ask for more information.  If you did not take any retirement plan distribution  in the tax year being questioned then they should be able to supply the details.  I am surprised that the letter does not tell you the source of the 1099-R that you did not report.

(Just a guess, but did you leave employment where you had a small 401(k) and the plan sent you the funds in the account?  That happens often, but you should have received a 1099-R unless you moved or it was lost in the mail.)

[SweetieJean]

You can get a Wage and Income Transcript here that will list the 1099-R:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/individuals/get-transcript">https://www.irs.gov/individuals/get-transcript</a>

[phat_leung]

I Contacted IRS as suggested, I was able to get the source of 1099-R. one follow up question.  On the 1099-r box 2a Taxable Amount shows $0.00 do I have to report and pay tax on that 1099 as income? Thank you for you advice.

[macuser_22]

All income must be reported, even non-taxable income.   Otherwise the IRS will think that it is all taxable.   What did the IRS tell you to do?  If they said to amend, and send the amended return to the address on the letter, then do so.    If they said that they will adjust the return to show the non-taxable box 2a amount and you do not have to do anything further, then just follow the IRS instructions.  They should have told you how to proceed.

If you amend just enter the 1099-R exactly as it is.   The zero in box 2a should place the box 1 amount on line 16a on the 1040 form and nothing on line 16b (the taxable amount).  ( I am assuming that the IRA/SEP/SIMPLE box is not checked on the 1099-R since it would be very unusual for a IRA distribution to be non-taxable with a zero in box 2a.)

[SweetieJean]

Is the 1099-R marked Corrected per chance?

[phat_leung]

The IRA/SEP/SIMPLE box is not checked.  In the letter IRS proposed it as taxable.  I am about to reply to that proposal in writing which I will high light the zero tax amount.  See what they will rely.  Thank you so much for your advice.

[fanfare]

look for the checkmark "Taxable amount not determined". in which case box 2a will be zero.
Hint: it is usually not set if the IRA box also  is not checked.
It also is unusual in that case that the taxable amount is zero.

(it would be very unusual for a non-IRA distribution to be non-taxable with a zero in box 2a if the distribution code is 7)

[SweetieJean]

"I did not took any distribution"
That's why I asked it was marked corrected, essentially to void one that was issued in error,

[macuser_22]

Exactly what was the distribution for?  Is this an insurance payment perhaps?

*Is* the box 2b "taxable amount not determined" also checked?    

Also, when you say box 2a is zero, is it *actually* "$0.00" or is it *blank*?    Blank is *not* zero.  Blank means that all of box 1 is taxable and a actual 0.00 (zero) in box 2a means that none of box 1 is taxable.   That is often confused thinking that blank and zero are the same - they are not, in fact they are opposite.