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tom_718
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I have a 401k plan. I also opened an IRA &made contributions. Contributions didn't qualify for tax breaks due to my income. I closed IRA & received 1099R. Is that taxable

 
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2 Replies

I have a 401k plan. I also opened an IRA &made contributions. Contributions didn't qualify for tax breaks due to my income. I closed IRA & received 1099R. Is that taxable

if you closed your IRA and took money out, and you are under age 59 1/2 you will have a 10% penalty for early withdrawal from an IRA.

I have a 401k plan. I also opened an IRA &made contributions. Contributions didn't qualify for tax breaks due to my income. I closed IRA & received 1099R. Is that taxable

Assuming you mean a Traditional IRA since only Traditional IRA's have "tax breaks" unless your income is too high.    Enter as below and the non-deductible contribution will offset all or some of the tax on the distribution depending if you have other Traditional IRA funds.

 

 

Be sure to enter the Traditional IRA contributions in the IRA contribution section.  If your income is too high, it should be non-deductible and create a 8606 form with the non-deductible contribution on line1, 3 and 14.

 

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 left side) 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.]

You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2020.

That will produce a new 8606 form with the taxable amount calculated on lines 6-15 and the remaining carry-forward basis on line 14.

NOTE: If there is an * next to line 15 then 6-15 will be blank and the calculations will be on the "Taxable IRA Distributions worksheet instead.

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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