taxable amount reported on 1099-R

[lvmTTy]

The taxable amount reported on a 1099-R for a distribution from a nonqulaified annuity is incorrect because a portion of the annuity balance was after-tax funds. Getting assistance from the annuity company is difficult. What happens if I just go ahead and report the correct taxable amount (determined using the IRS calculation method) on my return?

[JillS56]

The 1099-R that you received has been provided to the IRS.   The IRS is going to review your return and match it to your tax documents (1099-R) and when you report a taxable amount other than what is on the form the IRS is going to make the change to your return to match the 1099-R and then notify you of the change.

The proper way to make the correction is to have a corrected 1099-R prepared and filed with the IRS by the payer.

Making the change on your own and e-filing your return may result in a delay in processing your return and receiving your refund, along with the potential the IRS makes adjustments that will adjust your refund.

[dmertz]

If this is a deferred annuity and you received a non-periodic distribution, taxable gains come out before any of the nontaxable investment in the contract.  Only if you are receiving periodic payments as a result of having annuitized the contract is a distribution a mix of taxable gains and nontaxable investment in the contract.

If you report a different taxable amount than the amount in box 2a and do not provide a suitable explanation, expect a letter from the IRS claiming that you underreported this income.