topic Distribution Code 7D for 1099-R form. Is this taxable? in Retirement tax questions

Distribution Code 7D for 1099-R form. Is this taxable?

Kris3 — Thu, 06 Jun 2019 17:02:27 GMT

My grandma got a form 1099-R. Box 1 Gross Distribution and Box 2a Taxable Amount have the same amount $25,000. Distribution code is 7D. Nothing else in other boxes. She's single, 70 years old and hasn't filed taxes for years and her only other income is $9,000 from social security. Is she going to be taxed on the $25,000? I'm reading up on distribution code D that non qualified annuities may be subject to 3.8% additional tax under IRC 1411 if income exceed certain thresholds in her case $200,000. So does this mean she doesn't have to worry about paying taxes because her income is way below the threshold? Or does she need to pay taxes because $25,000 is in Box 2a as Taxable Amount?

It’s taxable, and she needs to file a tax return, because...

Hal_Al — Thu, 06 Jun 2019 17:02:28 GMT

It’s taxable, and she needs to file a tax return, because of box 2a. It’s just not subject to the extra 3.8% tax because her income is low. But, it’s a high enough amount that some of her social security will become taxable.

Social security only becomes taxable when added to sufficient other income. If you are otherwise required to file a tax return, you do need to enter it in Turbotax (TT). TT will determine the taxable portion.

Social security (including SSDI) becomes taxable when your income, including 1/2 your social security, reaches:

Married Filing Jointly(MFJ): $32,000

Single or head of household: $25,000

Hal_Al, thanks a lot for the speedy and well thought resp...

Kris3 — Thu, 06 Jun 2019 17:02:30 GMT

Hal_Al, thanks a lot for the speedy and well thought response.

Re: Distribution Code 7D for 1099-R form. Is this taxable?

RVThompson12345 — Fri, 17 Apr 2020 16:27:03 GMT

What is the significance of distribution code 7d

Re: It’s taxable, and she needs to file a tax return, because...

ETAet — Sun, 12 Feb 2023 18:44:38 GMT

I have a similar situation, also 70 and social security taxed. I received life insurance/inheritance money and it’s being taxed also?

Re: It’s taxable, and she needs to file a tax return, because...

CatinaT1 — Mon, 13 Feb 2023 14:08:08 GMT

Dependent upon your other income, up to 85% of your social security can become taxable. You will see below how to figure if you have taxable social security or you can visit IRS.gov and use the Interactive Tax Assistant tool.

 
Tax Formula.  Here’s a quick way to find out if a taxpayer must pay taxes on their Social Security benefits: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for their filing status. If the total is more than the base amount, some of their benefits may be taxable.
 
Base Amounts. The three base amounts are:
- $25,000 – if taxpayers  are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from their spouse for all of the tax year
- $35,000 – if they are married filing jointly
- $0 – if they are married filing separately and lived with their spouse at any time during the year

Re: Hal_Al, thanks a lot for the speedy and well thought resp...

ericvstrasser — Sat, 04 Mar 2023 18:09:08 GMT

my distribution code line 7 is 7D on a taxable amount of 9,999.97 is this taxable inPA

Re: Hal_Al, thanks a lot for the speedy and well thought resp...

DanaB27 — Sat, 04 Mar 2023 18:30:22 GMT

Yes, Form 1099-R with Code 7D distributions are taxable in PA and are reported as interest income on PA Schedule A. Please review your selection on the “What kind of retirement income do you have from Pennsylvania?” screen during the state interview.

"If you invested in a retirement annuity that is not part of an employer-sponsored program or a commonly recognized retirement program, you have PA taxable income when you begin receiving annuity payments. For tax years beginning on or after January 1, 2005, any amounts reported in gross income for Federal Income Tax purposes for a retirement annuity that is not an employer sponsored retirement annuity (reported as Codes 1D, 2D, 3D, 4D or 7D in Box 7 beginning with 2013 Forms 1099-R) are reported as interest income on PA Schedule A regardless of whether the annuity payments began before January 1, 2005, or on or after January 1, 2005." (PA DOR)

@ericvstrasser