Taxable amount on 1099-R distribution

[mdames]

On the 1099-R I just received from an my annuity company the Taxable amount (Box 2a) is much less than the Gross distribution amount (Box 1). Also, box 5 shows the amount of difference between the gross and taxable amounts. When I enter these amounts in Turbo Tax it is still showing that the taxable amount for income tax purposes is the higher amount in the Gross distribution box. My annuity company told me that the smaller amount in the taxable amount box is what I owe. This is because most of what was distributed to me in 2019 was out of my cost basis not the earnings from my investment. Why is TT still showing the gross amount instead of the taxable amount for income tax purposes?

[SusanY1 · Accepted solution]

From the information given, I can't tell for sure where you see the information but I imagine you see it on the Income Summary screen.  This screen in TurboTax doesn't reflect the taxable amount but the gross amount (Box1). 

The screen is a quick check screen to verify the documents entered.

TurboTax is still picking up the correct taxable amount that you are reporting in 2a for your tax return and will transfer it to the proper line on your tax return.

Here is a way that you can verify that it is working properly:

1. Log in to your tax return at TurboTax.com.
2. Click on Tax Tools on the left side of the screen (you may need to click on Continue in the center first).
3. Click on Tools.
4. In the box that pops up in the center, click on View Tax Summary.
5. On the left menu, click on Preview my 1040.
6. Scroll down to Line 4, where you should see that your total distribution and the taxable amount will show on 4a/4b (or 4c/4d).

[dmertz]

mdames, it's likely that you are misinterpreting what TurboTax is showing you.  With the correct taxable amount in box 2a and the investment in the contract that is nontaxable shown in box 5, it's unlikely that TurboTax would include the entire box 1 amount on Form 1040 line 4d unless you made an entry error.  Check your Form 1040 to see that the entire box 1 amount is included on line 4c but only the taxable amount from box 2a is on line 4d.

If the full box 1 amount is being included on line 4d, it's likely that you mistakenly marked the IRA/SEP/SIMPLE box on TurboTax's 1099-R form for this distribution.  The code D that you indicated in another post is accompanying the code 7 indicates that the distribution is not from an IRA and must not have the IRA/SEP/SIMPLE box marked.

Also make sure that you have not allowed TurboTax to use the Simplified Method to determine the taxable amount.  If you did, delete the 1099-R form from TurboTax and reenter it.

[Bcaffrey]

I have entered the amount of the gross dist for an inherited ira rmd($2964).  The total amount is not taxable because some of the contributions were after tax (46%).  The 1099 r shows taxable amount not determined.  How do I get the correct taxable amount to 1040?  

[dmertz]

When entering a code 4 Form 1099-R with the IRA/SEP/SIMPLE box marked you must calculate the taxable amount yourself outside of TurboTax, then enter the result when TurboTax asks for it.  Generally you should use a separate Form 8606 to do this calculation, mark this Form 8606 as being for calculating the taxable amount of the distribution from the inherited IRA (to distinguish it from Forms 8606 that TurboTax automatically generates for Taxpayer and Spouse's own IRAs) and include it with your mailed tax return.

[Aloneintheworld]

That was my question to the community.  I beg to differ on your solution.  Turbo Tax does not automatically transfer the information in box 2a on your 1099 R to line 4a on your 1040-SR, and there is the problem for me.  Turbo Tax transfers the larger amount in box 1, 1099 R, not the taxable amount in box 2a. I have reviewed the 1099 R every which way with the same result.  I am not a rookie, I have been using TT for 12 years and this has never happened.  Help

[Aloneintheworld]

Dear Community, Thank you all for your thoughtful replies, but the problem persists.  Before filing my return, I went to My Info on the left column of your screen.  From there you can review your actual 1040-SR form as it would be filed. The information on line 4a, IRA distributions of the 1040-SR reflects the amount in box 1 of my 1099 R not the amount in box 2a which I inputted and is a lesser amount.  I have completely erased the form and re inputted all the information again with the same result.  The information in box 2a on the 1099 R does not show up on line 4a of my 1040-SR automatically, line 1 does.

[VolvoGirl]

@Aloneintheworld   Why are you worried about line 4a?  Line  4a & 5a should be the GROSS amount from 1099R box 1.  Line 4b is the Taxable amount that adds to your income.   

[JohnB5677]

I want to be sure that I didn't misinterpret your statement.

• Box 1 of the 1099-R (Gross distribution) should be posted to Box 4a or 5a of your 1040, which represents the full distribution.
• Box 2a of the 1099-R (Taxable Amount) should be posted to Box 4b or 5b of your 1040 representing taxable amount.
• Is this what you're seeing on your return?

If this does not completely answer your question, please contact us again and provide some additional details.

@Aloneintheworld 

[Aloneintheworld]

Thank you for your response.  What I see on my 1040-SR is box 4a is empty.  Box 4b has the full amount of the distribution from box 1 of the 1099 R not the taxable amount in box 2a which is less than box 1

[Aloneintheworld]

Thank you Volvo Girl.  Box 4a on my 1040-SR is empty.  Box 4b shows the full distribution from box 1 of the 1099 R making the full amount taxable not the taxable amount from box 2a which I determined and inputted,

[dollyb1930--just fix this]

My friend

Do not get mad or angry.

It does not matter if you are 16 or 61 to drive a car.
If the car does not speed up you press the accelerator , if it speeds up you press the breaks.

It is that simple. So is Turo tax.

Turbo tax is not that complicated the way most of you portray it.

All you have is income. If it is income to you it is expense to some body else.

With all the hoopla on taxes, there are only 2 things income and expenses.

Income is what all you bring in and categorized as earned, capital gain/loss.

Expenses are your taxes, losses in your business and what all goes out of your pocket.

Turbo tax helps you to organize it and experts like LINDA are helping you and do not ask them for each and every nitty gritty things.

What LINDA and and other experts do it to help you in general trouble shooting.

Do not expect them to tell you to clear cookies , restart, delete your forms, reenter correctly--all of this you should have been done before.

Last but not the least, double clicking on the entry column or entry space should solve most of the problems.

A box appears or the program allows you to enter your data

PLEASE NOTE --TURBO TAX HAS OVERDIGING YOUR ENTRIES. JUST OVERRIDE IF THE ENTRIES AND FIX IT RATER THAN ASKING FOR HELP.

OVERRIDING WILL FIX IT.

IF YOU ARE HUNGRY YOU HAVE FEED YOURSELF AND YOU WILL NOT BE HUNGRY.

hope this helps 

[VolvoGirl]

OK that is a different problem.  And 4a can be blank if it is the same amount as 4b.  So you have the wrong amount in 4b.  Delete the 1099R and re enter it.  You must have answered a follow up question wrong.    What code is in box 7?  @dmertz 

[dollyb1930--just fix this]

Just override if the program allows you and enter the correct info.

If you cannot override, go to forms and fix it.'

The program will tell it is error and over ride is not permitted. Do not bother if your entry is right. It is that simple. as you are the one who knows what is right.

Hope this helps

[Aloneintheworld]

Thanks, I will try the delete route and re-enter.  Box 7 is the number 7 and the ira/sep/simple checked.