OPM doesn't give a taxable amount in box 2a for disability retirement annuitant? I don't know how much to enter

[angboy]

I reached my minimum retirement age over this past year. My 1099-R doesn't tell me the amount of my annuity that was taxable, it says "unknown" in box 2a. But my understanding is that the taxable amount would now be somewhat less than the total annuity amount. If I leave box 2a blank on TT, versus putting in the same amount as box 1, it makes about a 6K difference in my refund. I get about 6K more by leaving box 2a blank. But I'm sure the majority of my annuity is in fact taxable, based upon my husband's 1099 amounts in box 1 and box 2a (he's not a disability retirement annuitant so he has info for box 2a). How do I determine the amount that is taxable? I got help from a TT tax expert and they told me to leave that 2a box blank and then my refund went up by about 6K but I don't think this is accurate? I'm using the desktop version of TT, not the online version.

[ThomasM125]

If you could clarify what code(s) are in box 7 that would allow us to help you better. Box 2(a) is left blank because the issuer isn't certain what amount if any is taxable. However, TurboTax can determine that by the codes in box 7 and your answer to questions in the program after you enter the 1099-R form. It would also be helpful if you could tell us what other boxes have numbers in them.

[angboy]

Thanks for the reply. Box 7 says "3-disability". There are numbers in boxes 1,4,5,9b, and 14. 

[AmyC]

Taxable income left blank is common. Your Code 3 is disability so part of your income will be treated similar to wages because you have employer paid disability benefits. This makes you eligible for earned income credit and child tax credit. The part after your birthday is pension. Since you have a form that covers 2 different things, here are the options:

• If you have children - age 17 and under on your tax return and qualify for those credits, it would be worth splitting your form and entering the disability as one form and the pension as another form, each having the relevant parts and portion of income.*
• If you don't have kids- just enter the one form as-is.

Since you have reached the minimum retirement age, your disability is converted to pension/ annuity. You have box 9 - this will determine the taxable portion. You and the program will use the Simplified Method Worksheet. The questions are asked after you enter the 1099-R. 

Let me explain box 5 and box 9.

• Box 5 is health insurance premiums you paid with after tax dollars plus your nontaxable portion of the benefit. (If you know your health premiums, you can determine the nontaxable amount for this year on your own - no need).
• Box 9 is how much you paid in over the years working. The program then uses a factor based on your age to determine the % of box 9 that is non-taxable. 

Be sure you answer all the questions after you enter the 1099-R to get the correct taxable amount. Be sure to mark that you reached minimum retirement age!

Next, look at your tax return. 

Income reporting:

• If you enter the disability separately, it will go on 1040 line 1 wages.
• If you let it all be pension, 1040 box 5a is the total distribution, box 5b is the taxable amount.

*If you do have children and need help with breaking things up, reply back. It isn't common but I thought it was worth mentioning.

[angboy]

Thanks for that info. It helps me to understand but I still think the math doesn't add up. If I enter it the way you're suggesting, leaving box 2 a blank and *not* checking that box 2b "taxable amount not determined box is checked", which seems to be right, and then answering the rest of the questions correctly. including indicating that I'm now at MRA, my refund is 6K higher than if I enter the full amount from box 1 in box 2a (around 30K). So it seems that doing it the suggested way results in that entire 30K being untaxed, given that 6K difference, and I know that isn't right since it's only supposed to be a small difference between the full amount and the taxable amount.

[JamesG1 · Accepted solution]

TurboTax Desktop will use the simplified method to determine the taxable portion for box 2a of your OPM retirement distribution.   Presume that:

• Monthly payments were received,  
• Payments started in 2025, and 
• That box 7 is code 7.

You will need to know:

• The amount of the employee contributions (should be in box 9b),
• The date the annuity started,
• The number of months that payments were received in 2025, 
• The age of the recipient when the annuity started,
• The age of other beneficiaries (if there are any), and 
• Was the recipient under the retirement age for the plan.

At the screen Who gave you a 1099-R?, select Office of Personnel Management (CSA-1099-R).

Enter the pension distribution information.

After a few screens, you should arrive at We found a few other questions about your situation.  Click Continue.

At the screen Annuity information, select Yes for Periodic payments.  Click Continue.

At the screen Annuity information, select Yes for Did you start getting these payments in 2025?.  Click Continue.

At the screen Annuity information, select No for For the years you received these distributions, was the total amount shown in the form the amount you paid tax on?.  Click Continue.

At the screen Annuity information, enter the information requested.  Click Continue.

At the screen Annuity information, answer the question Does this annuity cover more than one individual?  Depending upon your answer, there may be several additional screens to answer.  Click Continue.

You should reach the screen Simplified method result.

You will be able to view the entry under Forms on Federal 1040 lines 5a and 5b.

@angboy 

[angboy]

Thanks very much! This seemed to do it correctly.