topic Re: OPM CSA 1099R with Court Ordered Apportionment in Retirement tax questions

OPM CSA 1099R with Court Ordered Apportionment

GPFox32 — Wed, 20 Jan 2021 17:54:46 GMT

Good morning, I'm completing my 1st TT tax return being a recently retired federal annuitant. My question concerns the amount that is being paid to my ex-spouse by a court ordered decree. Box 2a has UNKNOWN as my taxable amount. Do I subtract the amount my ex receives from the Box 1 gross distribution or do I just use the total in box 1 as my taxable amount? Thanks again.

Re: OPM CSA 1099R with Court Ordered Apportionment

macuser_22 — Thu, 21 Jan 2021 03:49:38 GMT

No -you do not.

Is there a QDRO (qualified domestic relations order) and the ex spouse gets their own 1099-R or do you receive the payment and give some to the ex.

If the first, then you have nothing more to do since the ex is responsible for reporting their own 1099-R.

If the 2nd, then you are responsible for all the tax and it is up to you to collect the spouses share of the tax (that the court order should specify) or reduce the amount that the ex receives minus their share of the tax. If the court order is moot on the tax then talk to your divorce attorney since the court order should specify how the tax should be paid and by who.

Re: OPM CSA 1099R with Court Ordered Apportionment

GPFox32 — Thu, 21 Jan 2021 17:25:30 GMT

It is the 1st. Thanks for the quick reply. Have a good day.

Re: OPM CSA 1099R with Court Ordered Apportionment

Tmcmichael63 — Wed, 07 Apr 2021 01:40:40 GMT

So to be clear to the question and answer below, we enter the taxable amount in block 2 with the amount listed in block 1? This is odd as I will be paying taxes on money I do not receive and they also will pay taxes on the amount they receive. Sounds like the government is double dipping.

Re: OPM CSA 1099R with Court Ordered Apportionment

macuser_22 — Wed, 07 Apr 2021 01:54:53 GMT

@Tmcmichael63 wrote:

So to be clear to the question and answer below, we enter the taxable amount in block 2 with the amount listed in block 1? This is odd as I will be paying taxes on money I do not receive and they also will pay taxes on the amount they receive. Sounds like the government is double dipping.

What do you mean "money I do not receive"?

If you are the receiver of the QDRO then you received the money.

Re: OPM CSA 1099R with Court Ordered Apportionment

Tmcmichael63 — Wed, 07 Apr 2021 02:32:25 GMT

I am not the receiver. I am the one that receives the retirement from the government. A portion of that called apportionment is sent to my ex. I am taxed on the full amount however block 2 of the 1099R lists unknown. Meaning of the full amount say 75K is my yearly income, 35k goes to the ex. OPM does not subtract her amount from mine when calculating the taxable amount. I was just wanting clarification if I am suppose to take my amount and subtract her amount and then enter that amount in block 2 as taxable.

Re: OPM CSA 1099R with Court Ordered Apportionment

macuser_22 — Wed, 07 Apr 2021 02:39:39 GMT

@Tmcmichael63 wrote:

I am not the receiver. I am the one that receives the retirement from the government. A portion of that called apportionment is sent to my ex. I am taxed on the full amount however block 2 of the 1099R lists unknown. Meaning of the full amount say 75K is my yearly income, 35k goes to the ex. OPM does not subtract her amount from mine when calculating the taxable amount. I was just wanting clarification if I am suppose to take my amount and subtract her amount and then enter that amount in block 2 as taxable.

With a QDRO the ex should receive a 1099-R for the portion that the ex receives that is taxable to the ex.

Your CSA-1099-R should only show the mount that you receive that is taxable to you.

Re: OPM CSA 1099R with Court Ordered Apportionment

busquets — Thu, 16 Mar 2023 01:42:02 GMT

Actually, the Form CSA 1099-R does not show the taxable amount (if you have a court-ordered apportionment). OPM is unwilling to figure it and, so, puts "UNKNOWN" in Box 2a. At the bottom of the form they will type "Gross Annuity reduced by <x> amount paid to <ex-spouse's name> under court-ordered apportionment. Taxable amount not determined." Box 1 show the total gross annuity BEFORE the apportionment is subtracted. I still haven't found a way to get TurboTax to let me subtract the apportionment without changing the amount in Box 1...which would create a discrepancy the IRS will call you out on. I haven't found a way to override the taxable amount on Form 1040 Line 5b to put the correct taxable amount. 😠

Re: OPM CSA 1099R with Court Ordered Apportionment

LindaS5247 — Thu, 16 Mar 2023 03:33:04 GMT

You should not change the amount in box 1. Do you have a QDRO?

If you spouse gets an apportionment, decreed by court order and receives a Form 1099-R, then she will report that portion as her income.

If you get the apportionment amount due your spouse, then give it to her then you are responsible for all the tax and it is up to you to collect your spouses share of the tax (that the court order should specify), or reduce the amount that your spouse receives minus their share of the tax. In this case you are reporting all of it and getting the taxes from your spouse on her share. This should all be in your agreement. If it is not you should talk to your attorney or OPM.

A QDRO or qualifying order is a judgment, decree, or order relating to payment of child support, alimony, or marital property rights. The payments must be made to a spouse, former spouse, child, or other dependent of a participant in the plan.

The order must contain certain information, including the amount or percentage of the participant's benefits to be paid to each payee. It can't require the plan to pay benefits in a form not offered by the plan, nor can it require the plan to pay increased benefits.

Re: OPM CSA 1099R with Court Ordered Apportionment

busquets — Sat, 18 Mar 2023 20:20:07 GMT

Hi Linda...thank you for your response. I have figured out a roundabout way to take care of the issue for now. It would be better, of course, if TurboTax could be updated to take care of this specific situation automatically. The specific situation for federal retirees with a court-ordered apportionment involves the Form CSA 1099-R. OPM places your Gross Distribution, BEFORE being reduced by the court-ordered apportionment, in Box 1. They type the reduction amount (total apportioned for the tax year) at the bottom of the form as a note (see my post above). Of course, you are not responsible for the taxes on the apportioned amount. However, OPM places the word "UNKNOWN" in Box 2a of the form. OPM WILL NOT calculate the taxable amount that should go in Box 2a for you. For reference, the taxable amount should be the gross annuity from Box 1 MINUS the total court-ordered apportionment typed at the bottom of the form MINUS the recovered annuity cost that Turbo Tax will calculate for you if you follow the instructions I present below.

Again, big the issue is that TurboTax WILL NOT accept anything other than a blank entry or a number when inputting the 1099-R. Following is what I found that will resolve the inconsistency:

a) Input the information for your Form CSA 1099-R but LEAVE Box 2a blank;

b) Got to View>Forms and click on the "1099R Summary" form to view it;

c) In the "Pensions and Annuities" section, Line 32a ("Taxable amount of distributions"), override the value with the taxable amount that you determine by subtracting the total apportioned amount for the year AND the recovered annuity cost (from either line 13 of Form 1099-R (Office of Personnel Management) or by doing your own calculation) from the gross distribution amount in Box 1 of your 10099-R.

d) Got to View>Forms and click on the "Form 1099-R (Office of Personnel Management)" form to view it;

e) On the first page under Box 2a check the small box that says "Taxable amount not determined".

You will see on Form 1040 that Line 5b now has the correct taxable amount of your apportioned pension/annuity.

Re: OPM CSA 1099R with Court Ordered Apportionment

busquets — Sat, 18 Mar 2023 20:24:48 GMT

Little update: when I stated "Again, the big the issue is that TurboTax WILL NOT accept anything other than a blank entry or a number when inputting the 1099-R", I meant that Box 2a of Turbo Tax's Form 1099-R WILL NOT accept anything other than a blank entry or a number when inputting the information.

Re: OPM CSA 1099R with Court Ordered Apportionment

ThomasM125 — Tue, 21 Mar 2023 23:45:07 GMT

You should enter the Form 1099-R as it is stated on the form without modification. This is because the IRS will compare their copy of the Form 1099-R with your entries and may question any deviation from that as listed on your tax return. It is worth noting that what you describe could be categorized as alimony which is not deductible on federal tax returns after 2018. This is in line with the suggested treatment of the distribution as mentioned by @macuser_22, namely you report the income and pay the tax and request a reimbursement from your ex-spouse.

If you need to adjust the income as reported you can do so by entering a negative adjustment to income as follows:

Choose the Federal option on your left menu bar
Choose Wages & Income
Find Less Common Income in the list of income sources
Use the Show More option to expand the choices and choose Miscellaneous Income, 1099-A, 1099-C
Choose the Other Reportable Income option and find Other Taxable Income in that section
Enter a description for your adjustment and the amount as a negative number

Re: OPM CSA 1099R with Court Ordered Apportionment

busquets — Wed, 22 Mar 2023 19:18:26 GMT

Hello ThomasM125,

I believe you misunderstand the problem. You state we "...should enter the Form 1099-R as it is stated on the form without modification". This is not possible. That is the problem at hand: Turbo Tax WILL NOT accept alphanumerics for Box 2a. And our CSA 1099-R from OPM Box 2a says "UNKNOWN".

Furthermore, what I described cannot be categorized as alimony; nor is it the situation mentioned by @macuser_22. That situation is when OPM pays the entire annuity to you, and you then provide payment to your ex-spouse for their share. The situation we are talking about here is when OPM pays the ex-spouse directly and provides said ex-spouse with their own 1099-R. In this case, OPM sends us a CSA 1099-R where in Box 1 they place the entire annuity amount for the year...without deducting the amount they paid to the ex-spouse and reported on their 1099-R. And in our Box 2a they place the (alphanumeric) word "UNKOWN". This situation is not handled by the current version(s) of Turbo Tax...without the workaround I provided in my prior post or the one you just provided in Steps 1-6. Thank you.

Re: OPM CSA 1099R with Court Ordered Apportionment

BillM223 — Wed, 22 Mar 2023 19:37:34 GMT

For whatever reason, the OPM insists on putting "UNKNOWN" in box 2a. Just put nothing in box 2a (in place of "UNKNOWN"), and you will achieve the same result, vis-à-vis the IRS.

The IRS instructions to the entity that creates the 1099-R say, "Generally, you must enter the taxable amount in box 2a. However, if you are unable to reasonably obtain the data needed to compute the taxable amount, leave this box blank." See Box 2a in the 1099-R instructions. So you should leave this box blank as you enter it into TurboTax.

@busquets

Re: OPM CSA 1099R with Court Ordered Apportionment

busquets — Wed, 22 Mar 2023 19:45:15 GMT

Hello BillM223,

I have tried just leaving Box 2a blank. The problem with that (without doing the rest of what I originally posted) is that Turbo Tax will neither compute your taxable amount nor determine your recovered annuity cost.

Re: OPM CSA 1099R with Court Ordered Apportionment

BillM223 — Wed, 22 Mar 2023 20:08:38 GMT

"Turbo Tax will neither compute your taxable amount nor determine your recovered annuity cost"

Leaving aside the issue of a QDRO, TurboTax will calculate the taxable amount if you go through the Simplified Method interview. You get there by entering (1) that you have a qualified plan and (2) that you receive periodic payments.

The purpose of the Simplified Method is to ask for the amount of "Basis" you have in the pension or annuity, then return it to you tax-free over the course of the annuity. Basis (also called "cost") is the amount of after-tax dollars in the annuity, for which you don't pay tax when you receive them (because they are "after-tax").

Re: OPM CSA 1099R with Court Ordered Apportionment

katwilli58 — Wed, 12 Apr 2023 16:44:17 GMT

I have the same issue with apportionment going to ex wife. when going thru interview it asks for the gross amount, the cost basis and amounts previously recovered tax free. I don't know where to find the number for amounts previoulsy recoered tax free.

Example: Gross distribution: 80,000, Taxable amount: unknown, Employee contributions 57,000 and a NOTE stating 10,000 was paid to Ex under court ordered apportionment Can I get a taxable amount from these numbers or do I need to dig deeper?

Re: OPM CSA 1099R with Court Ordered Apportionment

katwilli58 — Wed, 12 Apr 2023 16:46:06 GMT

And is the Gross amount really a combination of mine and my ex's apportionment?

Re: OPM CSA 1099R with Court Ordered Apportionment

ShirlynW — Sat, 15 Apr 2023 01:50:28 GMT

I advise you to contact your attorney or a local tax professional.

Re: OPM CSA 1099R with Court Ordered Apportionment

busquets — Sat, 15 Apr 2023 22:50:00 GMT

Gross Distribution (CSA 1099-R Box 1) is your total annuity BEFORE what the NOTE says was paid to your Ex under court ordered apportionment. What you state as your "Employee contributions", is that from Box 5 or Box 9b? Box 9b is your TOTAL Employee Contributions...what you paid into your retirement over the course of your government employment. You have already paid taxes on this amount. But OPM does not let you claim it (i.e. "recover it tax free") all at once. You have to distribute it over the course of your annuity. This depends on your age at your time of retirement. You calculate this using the Simplified Method (see Worksheet A in the IRS's Publication 721 -"Tax Guide to U.S. Civil Service Retirement Benefits"). Once you determine the amount to be "recovered" (the amount of the year's annuity that is not taxable) using the worksheet, and once you start deducting this non-taxable amount, you need to keep track of the amount you recover over the years. That is because, in total, you cannot end up deducting more than you paid into the annuity (which is what is shown in Box 9b of your 1099-R.