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Form 1099R box 5 does not reduce box 2 from being taxable for the non taxable amount - Form 1099R box 5 does not reduce box 2 from being taxable for the non taxable amount

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📊 Step-by-Step Guide

Step 1: Enter the taxable amount basis from box 2a

Use this when you need to enter the amount that determines whether the distribution is generally taxable.

Enter the amount from box 2a of the client’s paper 1099-R.

 

This part of the distribution is generally taxable. If box 2a is empty on the paper 1099-R, the payer may not have had all the facts needed to figure the taxable amount. In that case, the Taxable amount not determined box should be checked. Select the same check box in SureFire, if selected on the paper form.

Step 2: If the distribution is from a Roth IRA, use Form 8606 instead

Use this when the distribution is from a Roth IRA.

If this distribution is from a Roth IRA, the payer is not required to figure the taxable amount. Instead, see Form 8606, page 2, part III.

Generally, SureFire loads Form 8606 if it is needed, but be sure you have entered all information from the paper 1099-R into the 1099-R in SureFire and you have filled in any applicable fields on the Exclusion Worksheet.

Step 3: If eligible, elect the 10-year tax option for certain lump-sum distributions

Use this when the distribution is a total, lump-sum distribution from a qualified plan and the taxpayer qualifies for the 10-year option.

If this is a total, lump-sum distribution from a qualified plan (other than an IRA or tax-sheltered annuity) and the taxpayer was born before January 2, 1936 (or the taxpayer is the beneficiary of someone born before January 2, 1936), the taxpayer may be eligible for the 10-year tax option.

If the taxpayer qualifies and wants to use the 10-year option, select the check box labeled Elect 10 Averaging.

 

When you select this check box, SureFire loads Form 4972, Tax on Lump-Sum Distributions. Complete that form to figure the tax. For more information, open the IRS instructions for Form 4972 by pressing Shift+F1 on the form.

Step 4: Enter box 5 from the paper 1099-R

Use this when you need to enter the non-taxable recovery amount shown in box 5.

Box 5 - Enter the amount from box 5 of the client’s paper 1099-R.

Step 5: Understand what box 5 generally shows (and what it does not)

Use this to confirm you are interpreting box 5 correctly.

Generally, this box shows the following:

 

The employee's investment in the contract (after-tax contributions), if any, recovered tax free this year;

The part of premiums paid on commercial annuities or insurance contracts recovered tax free; or

The nontaxable part of a charitable gift annuity.

This box does not show any IRA contributions.

Tags: federal,form