Taxable Amount vs Annuity

[Peppermint90]

I am stuck on the question asking about my 2021 taxable amount...seems simple enough. My taxable amount in 2021 is very different than my taxable amount for 2022, since I retired at the end of 2021, and the pension payments are very different for 2021 vs 2022.. But when trying to put in the taxable amount for 2021 the Turbo Tax question would like to know the amount of the 'Annuity' I received  for 2021.  I am not receiving  annuity payments.  Should I just go ahead and put in the taxable retirement amount for 2021, even though it is not an annuity payment? Or is there another place that I can correct this label.

[BillM223]

Don't let the pension vs annuity confuse you - they are fundamentally taxed the same way.

"Should I just go ahead and put in the taxable retirement amount for 2021" - Probably not. It sounds like you must have said that you have a qualified plan (like most pensions), so TurboTax is going through the exercise of determining what the taxable amount of your distribution is for 2022.

If you are on the screen that asks "For the years [name] received these distributions, was the amount shown in box 2a of the Form 1099-R used as the taxable amount?", then answer "No, a different amount was taxable."

Then TurboTax will (probably) go through a number of questions to see if the Simplified Method can be used to determine the taxable amount.

NOTE: the purpose of this is in case you made after-tax contributions to your pension while working. If so, when the distribution is returned to you, then any after-tax amounts are not taxed again. But these after-tax amounts are not up front, instead, they are spread over many years - this is what the Simplified Method is doing.

Then, starting next year, you can point back to the 2a amounts for 2022, because it should be the same for many years.

[dmertz]

Unless you have reason to believe that the taxable amount shown in box 2a is incorrect, you should probably just indicate that that amount in box 2a is the correct taxable amount and should not use the Simplified Method.  If no made no after-tax contributions to the plan, the entire distribution is taxable.  Many TurboTax users end up reporting an incorrect taxable amount by using the Simplified Method when they have no need to and they do not understand the information that TurboTax asks for when using the Simplified Method.