Gross Distribution and Federal Income Tax Withheld on 1099-R

[kclark23]

So I'm a bit confused here. I started receiving annuity payments in 2024 after receiving a lump sum in October. On the 1099-R that I received, it says the Gross Distribution is $28,941 and the Federal Income Tax Withheld is $5,492. When I enter all of this information into TurboTax, it shows that all $28k is taxable income and I owe a pretty hefty chunk. If almost $5,500 of tax was withheld, how is all $28k taxable? Is this an miscalculation in TurboTax's software or am I not understanding correctly? Thanks in advance.

[ThomasM125]

The tax withheld and the tax on the income are separate things. The income of $28,000 is taxable and you had $5,492 withheld to pay that tax. So, on your tax return you will see the income of $28,000 on line 4 or 5 of your Form 1040. The tax on that will be reflected on line 16 of the form. Then, on line 25 the $5,492 withholding will be subtracted from your tax. If you didn't have enough tax withheld then you will have a tax amount due.

So, the $28,000 is fully taxable, you don't deduct the $5,500 from it, it is used to reduce the tax due on it. Also, you may have other income on which taxes were deducted. If all your tax paid in is less than the tax on your income, then you will end up owing when you file your tax return.

To view your form 1040 and schedule 1 to 3:

1. Choose Tax Tools from your left menu bar in TurboTax Online
2. Choose Tools
3. Choose View Tax Summary
4. See the Preview my 1040 option in the left menu bar and click on it
5. Choose the Back option in the left menu bar when you are done 

[VolvoGirl]

You didn't actually pay the tax.   You had taxes withheld like from your paycheck. You still have to enter the whole gross amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due. The Gross amount shows up on 1040 line 4a or 5a and the taxable amount on 4b/5b. The withholding will show up on 1040 line 25b.