Understanding IRS Form 1099-R

IRS Form 1099-R is a reporting form for income from pensions, annuities, retirement and other contracts and plans. You will use the form anytime you have received a distribution or loan from any of your federal savings plans. Thankfully, you will not be responsible for calculating the taxable income in most cases; your plan provider will do this for you. However, you will still need to report the amount you received and turn in Form 1099-R each year you receive distributions.

Which Distributions Qualify?

All income from savings plans, including insurance plans, should be reported on this form. Please note: simply having an IRA or 401k does not mean you are receiving distributions. Contributions are reported on a separate form, 1099-R is only for distributions you are receiving. Make sure you take your minimum distributions once you reach the age of 70 1/2, and do not take distributions before the minimum age of 59 1/2. If you make these mistakes, then you may face penalties in addition to taxes after reporting your income. Loans from your savings account treated as distributions may be included in the required reporting.

Who Determines the Taxable Amount?

In most cases, including IRAs, Roth IRAs and qualified plans, your plan provider will give you information on your distribution amounts and determine your taxes owed. This figure is provided to you on Form 1040 or 1040A. If you are receiving distributions from a qualified plan and your 1040 does not show the taxable amount in box 2a, you will use the instructions on that form to calculate the amount yourself. If your plan provider has not given you a 1040 by the time you file your taxes, request one immediately. This is the responsibility of the provider and that provider can be subject to penalties for delays.

What Information Do I Need?

You will find most of the information required on the Form 1040; this includes the taxable amount in most cases in box 2a. You will also need your Social Security Number for the forms. If you have received a lump sum distribution from your accounts, you may need a Form 8606 or 4972. These forms report income from items such as insurance payments and disability payments. If box 2a is empty, your provider did not have all the information necessary to calculate your taxable amount, and you must calculate the amount yourself. 

How Do I Fill in the Form?

All you need to do is transfer your taxable amount from your 1040 to the Form 1099-R. This can be done by a tax preparer if you are uncertain of what to do. If you need to calculate your taxable amount, box 2b will be checked on your Form 1040. The back of the form should have instructions for calculating this amount. Even if you are unsure of how to file, report the income to the best of your ability and file the forms. Late filing comes with a much heftier payment then misfiling. The IRS will notify you if your return has been rejected, and you will be able to try to retry.

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