How TT figures pension tax?

[user17709788658]

We enter info from a 1099-R.  The taxable amount (box 2) is not the same as the gross amount (box 1).  Instead of computing the tax, TT asks how we computed the tax in prior years.  We don't have a clue.  TT has computed the tax for every year for which we have been receiving a pension.  So, TT knows the answer.  In fact we buy TT so that we don't have to know how to figure the tax.  How do we answer the question?  TT wants us to choose between "General rule" and "Simplified method".  We certainly don't know how TT did it last year (or any year).

DG

[DoninGA]

Go back and edit your Form 1099-R.  After completing the entry of the 1099-R there are a series of screens. 

On the screen Annuity information you are asked For the years you received these distributions, was the total amount shown in the form the amount you paid tax on? 

If you answered NO, the following screen asks about the General Rule or the Simplified method. 

Answer YES to question so you will not be required to select either the General Rule or the Simplified method.

[SteamTrain]

@user17709788658 

Yep...return to the initial question, and do as @DoninGA  has indicated.

A couple of us had asked a Moderator to look into having the sentence changed to include box 2a in that YES statement...just as it did last year, but no action has been taken by the software folks yet.

If you did attempt to enter some $$ into either the General or Simplified calc methods, you might have to delete the 1099-R form entirely, and start over.

[user17709788658]

Thank you for your response.

But, my box 1 (gross amount) and box 2 (taxable amount) have different numbers in them (and have for every year that we got SS).  Doesn't that mean I should answer "NO" to the question about paying tax on the total amount?

DG

[SteamTrain]

@user17709788658 

SS?   a 1099-R doesn't have anything to do with Social Security.

IF you are attempting to enter your SSA-1099 from Social Security...you are using the wrong software form.

The SSA-1099 is in a different menu selection, just below the regular 1099-R form menu selection.

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BUT...if you are entering an actual 1099-R (pension, 401k/TSP, but not an IRA) with box 2a somewhat lower due to some after-tax contributions your made....then you do answer YES to that follow-up question....then the box 2a value is used in spite of what the text actually implies.

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Like I said, we really want the software folks to change the question to be what they used in prior years so that they stop misleading people to selecting the wrong answer

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Last year (for 2024 taxes)  the question was:

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This year (for 2025 taxes), they totally messed it up and needs to be changed:

[user17709788658]

Thank you SteamTrain, for the clarification.

I mistyped.  It was not "SS" that I meant, but an actual 1099-R from a pension.  My wife has been receiving that pension for 10 years, and, for reasons unknown to us, it always has a different amount in boxes 1 and 2a.  The difference is small, about 2%, but it is always present.

I will do as you suggest (answering "Yes" to the question.  But, really, how do I know what TT is doing with the numbers I enter?  I really don't know what numbers TT uses to compute our taxes-- nor how it does it.  And, I do not want to know.  I just want to know that it uses the data I enter to determine the proper minimum legal tax we owe.

Sometimes TT is extremely frustrating.  I'll start a new thread on it, but a good example is the headaches I have had with K-1 forms, or foreign tax payments, or TT telling me that it needs information from our 2024 taxes to finish computing SS (this time it really is SS) stuff.  TT has all my past taxes-- why doesn't it grab the required information automatically, instead of telling me to find it myself (and not even telling me what lines to get it from).  TT gets my prior accumulated stock losses and automatically carries it forward, but not SS data.  I really do feel that TT is inconsistent and undependable.  I just don't know that there is anything better, and it would be such a hassle to switch.

Anyway, thank you for your help.

DG

[SteamTrain]

@user17709788658 

Yeah, the only way to know whether TTX used the box 1 or box 2a values on a 1099-R...is to check lines 5a and 5b of the form 1040.   IF your 1099-R is the first one entered, then line 5b of the 1040 "should" show the box 2a value.  IF it's not the first 1099-R you've entered then you kind-of have to add things up yourself to know what should be on line 5b of the form 1040.

Since I had some after-tax contributions to my 401k, For my 1099-R , box 2a is only 0.4% lower , so it wouldn't be much of a deal if box 1 was actually used.

[VolvoGirl]

I have California state pension.  On my 1099R the difference between box 1 and 2a is the amount in box 5.    When I bought extra years of air time the payment was not deductible.  But the plan kept track of it and now prorates it on my pension so that part isn’t taxable.  Box 5 can be for different things.

[user17709788658]

Thank you.

Interesting.  I also observe that (box 5 is the difference between box 1 and 2a.  Don't really know how or why or when, or what to do about it (if anything)-- but it has always been there.  We just figure that TT will do whatever is necessary to compute proper tax.

DG

[user17709788658]

P.S.  My wife's 1099-R is from a State of Alaska entity (TERS)-- so maybe it is something related to state entities (as yours is something CA related).  Oh well, don't care so long as tax is computed properly.