Why was my refund lowered when I entered my 1099R

[ThomasM · Accepted solution]

On your federal return, retirement income on a 1099-R is taxable unless it's a qualified distribution from a Roth IRA or there are other specific circumstances.  So when you add a 1099-R, you're basically adding income to your return.  If no tax was withheld when you took money out of the retirement account (or pension), then you're increasing your taxable income without offsetting it with taxes paid.  So your refund will go down.

In the future, if you're getting a 1099-R each year, you might want to have taxes withheld if you wind up owing Uncle Sam or your refund is less than you're comfortable with.

[msnow5]

I have the same problem, but I did have state tax withheld from the pension withdrawal, at a higher rate than was necessary.  Yet my return still dropped many hundreds of dollars, I can't figure out why.

[Texas Roger]

Even if you had tax withheld at a higher rate than was necessary, you still may have not had enough withheld to pay the actual taxes owed from the income. If that is the case, you will still owe more taxes when you enter the 1099-R.

[msnow5]

Thanks, I did find what appears to be the problem.  I didn't realize CT starts taxing SS after $100K.

[Amber1108]

I had the same thing happen. They took a big chunk out in taxes. Then it lowered my refund by $2,000. So I got $8,000 and ended up paying $3,600 in taxes. It's ridiculous.