Form 1099-r Box 7 Distribution Code 3 does not appear on 1040 line 16a

I filed my form 1099 r box 7 code 3 porperly in TurboTax just as it was reported on that form for Tax year 2009.  The IRS sent me a letter saying I did not report this income.  My return does not indicate that this amount was reported on line 16a.  TurboTax did not report it there or anywhere else.  It just treated it like it just was not there.  I am disabled for several years and never had a problem before.  How do I answer the IRS and not pay the penalties and additional tax?
  • I am disabled and have been receiving a 1099-R for previous tax years with box 7 code 3 from my. I turned 55 in 2013 which is the  retirement age I would be eligible for my pension. So, do I record the taxable amount on the 1099-R as taxable income on 1040 or on line 16a on 1040? Thank you
  • Prior to 2013 the 1099-R amount was reported on line 7 because I am disabled and under the age of 55(normal age to receive my pension had I not became disabled). I understand that and that is the correct way to report it. My question is that now turbo tax is asking me "was I younger than 55 when I received the 1099-R taxable income for 2013". I was 54 part of 2013 and received part on the amount on the 1099R & 55 part of 2013 and received part of the amount on the 1099r. Do I answer I was younger or 55 in 2013? If i say younger it puts it as taxable income on line 7 on 1040. If I answer I am 55 than it puts in on line 16a on the 1040 as pension.
  • That is a good question.   I would check the 55 box to put it on line 16.   It probably will make no difference in your tax, but there is a possibility that having some additional line 7 income could change some credits such as the EIC or child credits if you have dependents.  If you try it both ways and the refund/tax indicator stays the same, I would just leave it all on line 16b.

    For a workaround, you could separate the payments before and after turning 50 and enter it as two 1099-R forms.  Answer under 50 for the amount before turning 50, and enter 50 for the amount paid after turning 50.   The IRS will just see the totals, not the two forms.
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Check to see whether the amount was reported on Line 7 rather than Line 16.  If you are under the age of retirement and this was a distribution due to disability as the Code 3 would indicate, it is considered earned income just like wages and is included in Line 7.
  • The amount is not taxable and does not appear on 7 of 1040.  I guess my question is why does this amount  not appear on the 1040 at all.  The IRS wants to know.   I just spoke with the IRS and they said that this amount must appear on Line 16a.  TurboTax does not do this.  Therefore I am believing that TurboTax is in error and causing me all this grief.  How do I get in touch with TurboTax and tell them of this situation?
  • You said "The amount is not taxable".   Was there a zero (0) in box 2a? (Or did you enter a zero?)
    Was box 2b checked?

    Howard is correct, that if you were at "retirement age", the amount of the disability (with "3" in box 7) goes on line 7, not line 16.  Further, if there was a "0" (not taxable) in box 2a OR box 2a was blank AND box 2b was not checked, then the amount should not show up on your return at all.

    The retirement age question is NOT based on your age on the personal information screen, but is an interview question asked after you enter the 1099-R information and the answer can vary depending on the age that the company making the distribution considers retirement age (usually 55, but can vary).

    I notice that you are posting from the desktop version of premier, did you use the desktop version in 2009?  If yes, you can open your 2009 return with the 2009 software and switch to the "forms mode" (icon at top of screen), and view your 1099-R form.

    See what the amount in box 2a & 2b are?
    The code in box 7?

    Scroll down to line "E" (Disability Payment - Minimum Retirement Age) - Is it checked YES or NO?

    If it is checked YES, then that is the answer to your question - the taxable amount should be on line 7 and if not taxable, not on the 1040 at all.

    If it is checked NO, then the taxable amount should be on line 16b and the nontaxable amount on line 16a.
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