Turbo Tax Deluxe Online: I received a pension, it was added to 1040 Line 4b which was added to my other income to equal AGI. My standard deduction was deducted = taxable income. Tax on income was indicated under Line 11. Line 14 added in the tax on the pension - which was already included in AGI and thus included in the Tax (Line 11). To add this tax in again is a double tax. Is Turbo Tax Deluxe not functioning properly or am I thinking this through improperly?
Line 14 comes from Schedule 4. What line on schedule 4? It could be the extra 10% Early Withdrawal Penalty if you are under 59 1/2. What code is in box 7 on your 1099R?
Are you getting a pension? Or take a distribution from a 401K?
Ok ... you are confused ... line 11 is the FEDERAL tax on the distribution and line 14 (from Sch 4) is the 10% penalty owed on that early distribution ... you owe both which is why they are both calculated. However the taxes that were withheld from the distribution are also entered on line 16 which balances it off. Sadly they probably only withheld 20% and if you are in a tax bracket higher than 10% you will fall short.
This pension is from a QDRO: Assets distributed from a qualified plan in accordance with a qualified domestic relations order (QDRO) are exempted from the usual 10% early-withdrawal penalty.
Then did you enter the 1099-R correctly ? What was the code in box 7 ?
Did you take the distribution directly in the year it was released ? Or did you roll it into an IRA and take it later ?
The IRA/SEP/SIMPLE Box was NOT checked.
I am the alternate payee; however, I was also a pension participant/employee in the same company (TIAA) we both work for a University.
Then the plan administrator should have known to use code 2 instead of code 1. You should contact them to make sure that they mark the account as a QDRO account so they can use the correct code for future distributions from this account.
For the distribution already received, in TurboTax go to Other Tax Situations -> Extra tax on early retirement withdrawals, indicate that the distribution was from a qualified retirement account and enter the amount otherwise subject to penalty (the entire Form 1099-R box 2a amount if you rolled none of it over) into the box labeled Alternate Payee Under QDRO. This will cause TurboTax to prepare Form 5329 Part I to eliminate the penalty.