Understanding Form 1099-R

Form 1099-R is an Internal Revenue Service (IRS) tax form that reports distributions taxpayers received from annuities, profit-sharing plans, retirement plans, IRAs, insurance contracts and pensions. Since distributions represent monetary gain for the taxpayers who receive them, they are subject to income tax. The distributions are not taxed if they are worth $10.00 or less. Form 1099-R is filled out by the institutions that issue the distributions and sent to the taxpayer. The taxpayers must then use that form to figure out how much they owe in taxes on their distributions. This document will explain how to read this form and use the information it contains.

Reading  Form 1099-R

Form 1009-R has many boxes, but only some of those boxes are actually relevant to the taxpayers. They include:

  • Box 1--this box contains the gross value of the distributions the taxpayer received during the previous tax year. Gross value is the value of the distributions before any deductions are taken.
  • Box 2a--this box contains the value of the portion of the distributions that is subject to income tax. This amount is determined by subtracting the number shown in Box 5 from the number shown in Box 1.
  • Box 2b--this box serves several functions. If the "the taxable amount not determined" box is checked, it is used to signify that the institution preparing the form wasn't able to determine what portion of the distributions is taxable. If the "total distribution" box is checked, this indicates that the full balance of the retirement account was distributed during the previous tax year. If the full balance wasn't repaid by the end of the previous tax year, the box next to it will contain the year the final distribution payment will be made.
  • Box 3--this box contains the amount of charitable gift annuities that are taxable as capital gain.
  • Box 4--this box contains the total amount of the federal income tax withheld from the taxpayer's distributions during the previous tax year. The amount withheld is calculated based on what type of distribution it is and his or her marital status.
  • Box 5--this box contains the portion of the distributions that is not taxable for the previous tax year. This includes any of taxpayer's contributions on which he or she already paid income taxes, as well as any insurance premiums the taxpayer is allowed to recover when filing the tax return.
  • Box 7--this box contains the distribution code, which indicates the type of distribution received. The detailed list of all the codes and what each of them means is written on the back of the form.
  • Box 10--this box contains the amount of the state tax withheld from taxpayer's distributions during the previous tax year. It is considered a partial prepayment of the taxpayer's personal state income tax.

Using the Information from Form 1099-R

Once the taxpayer receives Form 1099-R, they will have to figure out which numbers go into which box on their income tax form. The contents of Box 2a should be entered in Line 15b. However, if the taxpayer rolled over the full amount of their distribution into another qualified plan, the taxpayer should enter that number in Line 15a and put a zero in line 15b. The number in Box 4 should be entered on Page 2, Line 61.

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