How do I figure the Tax-Free Amount Previously Recovered? I have a CSA 1099R with Box 1 $3576, Box 2 $3471, no tax withheld, and 9b is $2257. Confusing! Is

[willcastle43633]

The amount is required because this is not the first year.  But I can't find ANYTHING on how to simply compute this number!

[macuser_22]

If box 2a has an amount it it then that is the taxable amount and has already been computed for you. 

How did you do it last year?

That is probably a CSA 1099-R from OPM.

The taxable amount in box 2a is usually the taxable 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 or 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.]

[willcastle43633]

I am helping a family member with their taxes, whose husband passed late last year.  He always did the taxes.  They had them done by H&R Block last year.  I have a copy of the return, but it doesn't include the Simplified Worksheet to answer this question.

The  "Learn More" box says "If this is not the first year of your pension distribution and you computed part of your distribution in past years as being nontaxable, you must enter an amount here."  

This ISN'T the first year, and part of last year's distribution WAS non-taxable, because there's a $104. 16 difference between the Gross and the Taxable amounts.  So, the $104.16 is the nontaxable portion, correct?  But, the Learn More box just says  "you must enter AN amount here."  What amount?

[willcastle43633]

Further,  the information I'm reading seems to imply that the Simplified Method worksheet is what should be used to calculate the Tax-Free Amount Previously Recovered.  However, the Worksheet asks for the same number I'm using it to compute -- any amount recovered tax-free.  Line 6 says  "Enter the amount, if any recovered tax-free in years after 1986." 

[willcastle43633]

Last year's 1040 shows the Total IRAs, pensions and annuities in Box 4a as $45,516 AND a Taxable amount in Box 4b of the1040 as $45,192.  The amounts in those two boxes are different, so it appears to me that the answer to the question "if you computed part of your distribution in past years as being nontaxable" is yes, because the 1040 implies that $324 of the total is non-taxable.

The fact that the1040 indicates a non-taxable portion also indicates the Simplified Method was used last year, correct?  And if it was, that worksheet isn't included in the paperwork from H&R Block.  :( 

[macuser_22]

What was in box 2a iin the 2018 CSA 1099-R last year?   Does that account for the non-taxable amount in 2018?

As the instructions say,  this years starting point for the simplifies method must have the figures form last years simplified method worksheet.    The amount of unrecoverable basis will change every year based of the carry forward values.    If the simplified method is used you cannot skip a year.

The instructions for line 6 say "Enter any amounts previously recovered tax free in years after 1986. This is the amount shown online 10 of your worksheet for last year".

What method was used in 2017?   If the simplified method was used and not used in 2018 then to use it in 2019 and beyond, the 2018 return must be amended to use the simplified method prior to doing 2019.

[macuser_22]

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@willcastle43633 wrote:

...so it appears to me that the answer to the question "if you computed part of your distribution in past years as being nontaxable" is yes, because the 1040 implies that $324 of the total is non-taxable.

The fact that the1040 indicates a non-taxable portion also indicates the Simplified Method was used last year, correct?  And if it was, that worksheet isn't included in the paperwork from H&R Block.  :( 

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Not necessarily  if the box 2a amount was used and not the simplified method.   I cannot help with what H&R Block might have done or how they did it.   Perhaps they have the records.   In any event to use the simplified method in 2019 you need the 2018 worksheet line 10 amount.

[macuser_22]

You should also talk to OPM.   My understanding is that if there is an amount in box 9b AND a taxable amount in box 2a then *OPM*  *has* used the simplified method to calculate the taxable amount so you do not do it again, just say in the interview that the box 2a is the taxable amount.

That would mean that $105 is not taxable this year.

[willcastle43633]

AH, soooooo!!  I'm starting to see the light.

The problem I was having was on the page where it asks you to enter the Annuity Information.  There are four boxes:

Annuity Start Date

Plan Cost

Number of Months Payments were received in 2019

Tax-Free Amount Previously Recovered - This is the box I was struggling with

The above-referenced page with the 4 boxes does/doesn't come up, depending upon the answer to the question provided on the page before, which is:  "Was the amount shown in the taxable annuity box the taxable amount?"  There are two possible answers:

1. Yes, the taxable annuity amount was used as the taxable amount,

2. No, a different amount was taxable

Both the question and the first answer are confusing to me.  There is a Taxable Amount box (2a) on the 1099, but not a taxable annuity box.  What did make sense to me was that the taxable amount (2a) is different from the Gross distribution amount (Box 1), so I chose the second option.  But that's the option that caused the four questions to appear (and my headache).    So, in plain English  🙂  LOL, what are they really saying when they ask, "Was the amount shown in the taxable annuity box the taxable amount?"  What is the taxable annuity box?

[macuser_22 · Accepted solution]

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@willcastle43633 wrote:

1. Yes, the taxable annuity amount was used as the taxable amount,

That is what you choose and you are done.

Box 2a *is* the taxable annuity amount if there is an amount in it.    The simplified method is only used if box 2a is blank and box 2b (not determined) is checked.