Disability and EIC

[Earl]

Have a client that received a 1099R for disability pension. Client turned 55 in July which is the minimum retirement age where he worked (coal miner). Prior to minimum retirement age disability payments are considered as wages and shown on Line 7 of 1040.

Would you split up the amount on 1099R between wages and pension? If yes how would you show it on the return. My software does not have the ability to record split amounts for a 1099R.

Makes a difference due to the earned income credit.

[Burke]

Probably won't work as full 1099R will be reported to IRS under one code number. Is it "3" or "7?"

[Earl]

Disability

Coded as 3 Disability. Have done it in the past where the full amount was reported on Line 7 and software has option on 1099R input to include on Line 7.

[Gary2]

Pub 575 makes it clear that it should be split. The 1099R instructions imply that there should be two 1099s, but I've never seen that done. I don't know if the IRS will complain if you split it, but it's probably easier to convince the IRS that you're right than to convince the payer to reissue a single 1099R as two.

[Burke]

Gary2 is correct in that there should have been 2 1099-R's. And I have seen this done. One prior to 55 showing "3" and one after, showing "7." If you can get it corrected, do so. I was thinking ahead to when the computer matches it to the return. And since it affects EIC, well, you can try the split and see what happens......