Turbo Tax is taxing nontaxable retirement income

[nanimal]

My 1099R has Gross distribution.  Taxable amount not determined and Total distribution boxes are checked.  Box 5 showing employee contribution is greater than Gross distribution.  This income should not be taxed, but Turbo Tax is taxing it.

[CatinaT1]

Review your entries for the 1099-R.  Be sure you have everything entered exactly as it appears on the form, including the distribution code in box 7.

[nanimal]

It’s entered correctly. Distribution code 7D

[Irene2805]

Code D indicates an annuity payment from nonqualified annuities.  When you make withdrawals or begin taking regular payments from the annuity, a portion of each annuity payment is allocated to the your cost and is tax free.  The remaining amount is taxable as ordinary income.

[nanimal]

Yes. But Turbo Tax is taxing it. I have to put a zero in the taxable amount even though it wasn’t on the 1099R

[Irene2805]

Part of the distribution should be taxable.  Is there an amount in Box 2A of the 1099-R?  You should check with the institution that issued the 1099-R to see how much (if any) of the distribution is taxable.

[nanimal]

I did. He said zero. The employee contribution in box 5 is greater than the gross distribution. 

[Irene2805]

If you do not have an amount in box 2a (taxable amount) and the Taxable amount not determined box is marked, TurboTax will considered the distribution taxable.

Just remove the mark from the Taxable amount not determined box and the distribution will appear on line 5a of the 1040, but not 5b (taxable portion)