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slw86787stark
Level 1

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

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? 

15 Replies
VolvoGirl
Level 15

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

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?  

Critter
Level 15

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

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. 

VolvoGirl
Level 15

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

You can lose like 50% of a distribution or more with federal and state taxes and penalties.

slw86787stark
Level 1

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

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.

Critter
Level 15

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

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 ?  

slw86787stark
Level 1

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

Box 7 Code = 1

slw86787stark
Level 1

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

I took the distribution directly from QDRO funds.

slw86787stark
Level 1

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

I wonder if the 1099-R was correct.  I'll have to call TIAA, I guess.

 

dmertz
Level 15

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

Also, was the IRA/SEP/SIMPLE box marked on the Form 1099-R provided by the payer?

 

Are you the alternate payee under the QDRO or are you the pension participant/employee?

slw86787stark
Level 1

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

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.

dmertz
Level 15

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

Did you take a distribution from a separate account established under the QDRO or did you roll the QDRO into your own account and take the distribution from there?

slw86787stark
Level 1

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

I took it from the established QDRO account. I didn't roll it into an IRA or move it into any other account.

dmertz
Level 15

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

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.

slw86787stark
Level 1

Pension reported on 1040 4b added to income. Line 11 indicates tax owed on AGI including pension income. Line 14 other taxes, which is tax on pension = double tax. Why?

Thanks so much for the information - you just saved me lots!  I truly appreciate you expertise!!!!!

 

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