topic Re: Incorrect code for Box 7 in 1099-R in Get your taxes done using TurboTax

Incorrect code for Box 7 in 1099-R

TxCatLady1 — Tue, 10 Mar 2020 19:21:30 GMT

My financial adviser said I could take an early distribution since I'm on Disability. When I got my 1099-R the distribution code is showing as 1. Shouldn't it be a 3? If so, how do I get it corrected? Thanks

Re: Incorrect code for Box 7 in 1099-R

MinhT1 — Tue, 10 Mar 2020 19:47:00 GMT

You do not have to get your 1099-R corrected. You can indicate in TurboTax that your distribution was for permanent disability and the early withdrawal penalty will be waived.

After you have entered your form 1099-R, on the summary page, click Continue and follow the TurboTax interview until you arrive to a page titled Did you use your IRA to pay for any of these expenses?. You can enter the amount of the distribution in the box Permanent disability (see screenshot).

Re: Incorrect code for Box 7 in 1099-R

macuser_22 — Tue, 10 Mar 2020 19:57:14 GMT

Code 3 is normally used for a disability pension when an employee leaves work because of a disability. Other financial institutors can use code 3, but do not in most circumstances, because they so not have the resources to verify and obtain the doctors records to prove the disability (and they have no reason to take on that responsibility) , so it is up to the taxpayer to claim it themselves on their tax return and prove it to the IRS if questioned.

Re: Incorrect code for Box 7 in 1099-R

TxCatLady1 — Fri, 13 Mar 2020 19:05:31 GMT

Thank you, thank you, thank you. I was actually hoping that would be the answer, but I was too nervous to try before asking the question.