1099-R Percentage of Total Distribution

[stephenmyrick]

I received a 1099-R from my late fathers life insurance.  I received 25% of the payout along with my siblings.  When I enter the info in my taxes, it appears to be calculating taxes on the entire 100%.  I switched the 25% to 100% and my numbers didn't change.  Is this normal and accurate?  I switched back to the accurate 25% but my taxes owed did not go down.

[DavidD66]

Was the payment for the death benefit of a life insurance policy?  If so, it is not taxable.  Death benefits of life insurance policies are not taxable income to the beneficiary.  What is the code in Box 7 of the 1099-R?  Review you Form 1040 to see if the amount you are reporting is showing up on page 1 of your Form 1040.  To review your Form 1040, while logged in and in your return:

• On the far left of your screen, click on Tax Tools
• From the Drop Down menu, click on Tools
• Click on View Tax Summary on the pop up window
• On the far left, click on View my 1040

[stephenmyrick]

Box 7 has a code of 4 and D.  I thought it was the death benefit from a life insurance policy.  I entered everything on the form, and it is showing the entire 100% as taxable income on my 1040.  

[LindaS5247]

It may be taxable if it is an inherited annuity.  Code D indicates an annuity.

Code 4: Death

Code D:  Annuity payments from nonqualified annuities and distributions from life insurance contracts that may be subject to tax under section 1411.

Use Code D for a distribution from any plan or arrangement not described in section 401(a), 403(a), 403(b), 408, 408A, or 457(b).

Annuities are taxed as ordinary income when inherited. The proceeds of inheritance are taxable. If a beneficiary opts to receive the money all at once, they must pay taxes immediately.