topic Re: 1099-r in Retirement tax questions

1099-r

1099r issue — Fri, 28 Feb 2025 16:53:43 GMT

I have entered mu 1099-r into turbo tax and it is not picking up on the taxes that were withheld. It is also not saving that I took the funds out after I was the age 59.5 years old

Re: 1099-r

BillM223 — Fri, 28 Feb 2025 17:44:04 GMT

Please tell us your age at the end of 2024, and tell us what was in boxes 1,2a, 4, 7, and if the IRA box was checked.

Re: 1099-r

SteamTrain — Fri, 28 Feb 2025 18:54:17 GMT

@1099r issue

Especially if you uploaded a PDF or Picture of your 1099-R form?

.......it is absolutely CRITICAL, that you EDIT every 1099-R form you entered that way and check every box against your paper form.......Because the AI that interprets that PDF/Picture upload will commonly enter stuff in the wrong place.

Re: 1099-r

1099r issue — Fri, 28 Feb 2025 19:16:50 GMT

my age at the end of 2024 is 59 and 11 months

box 1 & 2a is the $$ amount I pulled from my IRA

Box 4 the amount i held back in taxes which is 10%

Box 7 = 7 and yes it has an X in the box to its right

Re: 1099-r

SteamTrain — Fri, 28 Feb 2025 20:42:51 GMT

Well, the box 2a amount will be the taxable amount on line 4b of the form 1040. (plus the taxable amount of any other IRA 1099-R forms you entered)

And as long as the exact same box 4 value is in "Software's" box 4 entry for that 1099-R form, then you most certainly got Federal credit for having paid it. Of course, the 10% withheld may have been less than the eventual tax applied, based on your total income...so you may still owe the difference. Like, if your income is already in the 22% tax bracket, you'll owe another 12% on the 2a value......or even more if you are in a higher tax bracket.

Just make sure the box 1, 2a, and 4 values on your paper form are the same as what you see on the software's 1099-R form for that Payer.

_______________________

Still don't trust it? then delete that 1099-R form entirely, and re-enter it entirely manually.

Re: 1099-r

1099r issue — Fri, 28 Feb 2025 20:49:50 GMT

do you need exact numbers or will this work ?

my age at the end of 2024 is 59 and 11 months

box 1 & 2a is the $$ amount I pulled from my IRA

Box 4 the amount I held back in taxes which is 10%

Box 7 = 7 and yes it has an X in the box to its right

Re: 1099-r

1099r issue — Fri, 28 Feb 2025 20:52:29 GMT

isn't 1099-r income taxed differently as un-earned at the 10% rate?

Re: 1099-r

SteamTrain — Fri, 28 Feb 2025 20:52:35 GMT

For the moment, no numbers are needed....BUT...what makes you think you aren't getting a Federal credit for the taxes you had withheld in box 4?

Re: 1099-r

1099r issue — Fri, 28 Feb 2025 20:53:26 GMT

the below is from the IRS handbook...

If only item (1) applies and
distribution code 1 is correctly shown in
box 7 of all your Forms 1099-R, you
don’t have to file Form 5329. Instead,
multiply the taxable amount of the distribution by 10% (0.10) and enter the result on line 8. The taxable amount of the
distribution is the part of the distribution
you reported on Form 1040, 1040-SR, or
1040-NR, line 4b or 5b, or on Form
4972. Also check the box on line 8 to indicate that you don’t have to file Form
5329. But you must file Form 5329 if
distribution code 1 is incorrectly shown
in box 7 of Form 1099-R or you qualify
for an exception, such as the exceptions
for qualified medical expenses, qualified
higher education expenses, qualified
first-time homebuyer distributions, or a
qualified reservist distribution.

Re: 1099-r

SteamTrain — Fri, 28 Feb 2025 20:59:27 GMT

No...that 10% (0.1 multiplier) is only the "Penalty" applied if box 7 had a code 1 in it.

The 10% you had withheld may have only been a recommended amount, and may have not actually covered your actual income tax on the distribution.

Any pensions/IRA distributions are subject to being tax at whatever marginal tax rate is applied, based on your total income.

Re: 1099-r

1099r issue — Fri, 28 Feb 2025 21:14:35 GMT

Turbo tax has a question asking if I took the money before or after I was 59.5. I am trying to change it to NO I did not take the money out before I was 59.5 and it reverts back to YEs, which would mean I would get hit with the penalty.

Re: 1099-r

SteamTrain — Fri, 28 Feb 2025 21:37:43 GMT

Noooo.....ahhh, Yeah, the software does this.

You set it at a NO.

And it keeps that as long as you don't edit that 1099-R again......IF you go thru it again, yep, it resets and asks again

If you have it set properly, and want to know if a penalty was applied, you can look at line 23 of your 1040. If no $$ there, then there was no penalty. IF there were some $$ on line 23, then you'd have to look at the Schedule 2 (line 8 ) for the exact source.....(because you might have other additional taxes that add into line 23 of the 1040).

________________________

I tested this on the Desktop software with box 7 being a code 7, and saying NO to the early withdrawal (for someone turning 59.5 in 2024), gives the proper result with no penalty....no schedule 2 either. Unless I went back and edited the 1099-R again and stepped thru the follow-up...yep, I had to reset the NO. Just don't go back once it's set right (unless you have to for some other reason).

________________

I have no idea why the software folks don't trust the box 7 being a code 7, and just not ask the question 59.5 question.

(Military folks can retire long before age 59.5...but I don't know if their 1099-R forms are coded 2 (exception to age 59.5), or 7)

Re: 1099-r

BillM223 — Fri, 28 Feb 2025 21:38:36 GMT

"It is also not saving that I took the funds out after I was the age 59.5 years old" Now I understand what you meant.

Every time you go back to the screen "Money received before age 59 1/2", it's checked as Yes, even though you had marked at as No before.

This behavior confuses taxpayers, as you can imagine. Your No answer was preserved in TurboTax until you returned to that screen, then you have to answer No again.

There are a few screens like this in TurboTax. It has to do with the philosophy that some questions are so important that they need to be answered every time.

You can prove that TurboTax is keeping your No answer by checking No and seeing the Refund Meter change (if you can see the Meter), then go back and let it be Yes - you should see the difference.

Re: 1099-r

Williek — Sat, 22 Mar 2025 22:26:01 GMT

Same here my 1 1/2 hour tax job took seven days of reworking, bitching, complaining, yelling at the wife till I deleted it...my neighbor gave me a license for his Home and Business version and it went right through even though it entered my 1099r twice which I caught...there soft ware sucks