1099-R Box 7 code G but amount in 2a Taxable amount

[taxpro#1]

Hello All: This is my first post in this forum. I have a client who told me he took some money from his retirement. He gave me his 1099-R, it has amount in line 2a but box 7 Distribution Code is G. He told me he received money from his retirement plan but the 1099-R box 7 code G indicates that it is rollover and nontaxable. What should I do. I thank you all for your help.

[Snaggletooth]

Not Taxable

...as you know. I would enter the 1099-R into your software package just as is, and see if the "G" will trump the taxable amount. If so, and the taxpayer really did rollover the amount, I would let it fly.

But the real question - did the taxpayer really "rollover" this amount? You need to ask him this specifically, as you are getting conflicting signals from the 1099-R.

Welcome to the forum, TaxPro. We provide answers of all kinds (occasionally wrong ones) and have a little fun when we have time. A great place to interface with preparers like us all over the country.

[S T]

I had to think about the OP for a minute - If there was a Code G in Box 7 then 2A should be -0-

2a Taxable Amount
Generally, you must enter the taxable amount in box 2a. However, if you are unable to reasonably
obtain the data needed to compute the taxable amount, leave this box blank. Do not enter excludable
or tax-deferred amounts reportable in boxes 5, 6, and 8.
Enter 0 (zero) in box 2a for:
 A direct rollover (other than a qualified rollover contribution under section 408A(e) or an IRA)
from a qualified plan, section 403(b) plan, a governmental section 457(b) plan, or a rollover
from a designated Roth account into a Roth IRA
 A traditional, SEP, or SIMPLE IRA directly transferred to an accepting employer plan
 An IRA recharacterization
 A nontaxable section 1035 exchange of life insurance, annuity, endowment or long-term care
insurance contracts
 A nontaxable charge or payment, for the purchase of a qualified long-term care insurance
contract, against the cash value of an annuity contract or the cash surrender value of a life
insurance contract.
For more information on qualified rollover contributions under section 408A(e), see Qualified rollover
contributions as defined in section 408A(e).

Code G in Box 7 indicates a "direct rollover" from a qualified plan, etc-----

Might be some extenuating circumstances, but the 1099R reporting being posted, raises some questions?

What is the difference in Box 1 - Gross Distribution , and Box 2a - taxable distribution - maybe this was only a partial "direct rollover" -

I just did a quick sample in my software - Box 1 Gross at 10,000 and box 2a at 2,000 with a Code G - it gives me a taxable amount of $ 2,000

Maybe we need more info! and the T/P also needs to furnish more documents in support of the amount $ Rollover for the Tax Preparer.

Hmmm!

Sandy

[FEDUKE404]

Going by the Form 1099-R

I had to think about the OP for a minute - If there was a Code G in Box 7 then 2A should be -0-



Code G in Box 7 indicates a "direct rollover" from a qualified plan, etc-----

Might be some extenuating circumstances, but the 1099R reporting being posted, raises some questions?

What is the difference in Box 1 - Gross Distribution , and Box 2a - taxable distribution - maybe this was only a partial "direct rollover" -

I just did a quick sample in my software - Box 1 Gross at 10,000 and box 2a at 2,000 with a Code G - it gives me a taxable amount of $ 2,000

Maybe we need more info! and the T/P also needs to furnish more documents in support of the amount $ Rollover for the Tax Preparer.

Hmmm!

Sandy

Good questions!

I agree with you: The "G" on the Form 1099-R basically rules, making any "taxable amount" issues moot.

IIRC, when I have had a client with a partial rollover (i.e. he "kept" some of the money), there was more than one Form 1099-R. Namely, one with Code "G" and a second one with Code "7" or "1" or whatever. Of course, if it was not a direct rollover....just about anything can show up on the Form 1099-R.

That may be the case here. Clients (and tax pros!) can easily be confused until they are made aware of ALL of the pertinent facts involved.

FE

[DaveO]

I ran into this one too. The client had rolled an old 401K over into a ROTH IRA. I had to change to code to "H" to get the software to handle it right.

[Burke]

That may be the case here. Clients (and tax pros!) can easily be confused until they are made aware of ALL of the pertinent facts involved. FE

Not to mention the confusion of the persons who issue the 1099-R's! I recently had a client who had one issued for after-tax contributions to a retirement plan. IRS is demanding their due. When she talked to her company, there was an "oops".... and a corrected 1099R is now in my possession showing non-taxable in Box 2a and the entire amount in Employee Contributions to send with my correspondence to the IRS.

[FEDUKE404]

You can do that?

I ran into this one too. The client had rolled an old 401K over into a ROTH IRA. I had to change to code to "H" to get the software to handle it right.

Are you sure you can legally modify/alter what is actually on a Form 1099-R, especially for efiling ??

It's always been my understanding an ERO must exactly reproduce all data (to include recipient mailing address) as shown on a W2, 1099R, or similar. Right or wrong. Of course, if there IS an error, the preferred path is to obtain a corrected replacement document.

(Yeah, I tend to get antsy with most Circular 230 stuff. )

FE

[taxea]

Are you sure you can legally modify/alter what is actually on a Form 1099-R, especially for efiling ??

It's always been my understanding an ERO must exactly reproduce all data (to include recipient mailing address) as shown on a W2, 1099R, or similar. Right or wrong. Of course, if there IS an error, the preferred path is to obtain a corrected replacement document.

(Yeah, I tend to get antsy with most Circular 230 stuff. )

FE

Cannot change info on W2 but you can make changes to the codes on a 1099 if you can't get a corrected copy. If the amount is incorrect or no amount should be in 2a adjust it out with an explanation.

[Kram BergGold]

How will IRS react

If you change a 1099-R code, don't you thnk the IRS may not buy it. I would insist on a corrected 1099-R or I would be sure I had all the paperwork in my file to prove the 1099-R was wrong for when the CP-2000 comes.

[DaveO]

I understand the requirement that I enter the 1099R as produced. I could not get the software to see it as taxable any other way. I didn't think the IRS would object to me coding an item as taxable when the original box code showed it as non-taxable. In this case it was a small amount of money, I was meeting with the wife and it was the husband's 1099R. I had the return entered when she called me back and told me it was a conversion to a ROTH, not a traditional IRA. I suppose if the IRS objects I will give in and let it be non-taxable.

In a recent audit of a different client the IRS agent asked for documentation of all income, there about $10k of claimed income for which I could produce no documentation. When he alluded to the fact that that could be a problem I told him I would not object to him removing the income from the return. He failed to see the humor but did note the absurdness of his position.

[ddoshan]

I would be very skeptical about changing any codes that you think might be incorrect. It may be, but I don't think we should arbritrarily make any change. Often the client will give the wrong or misleading information or even not have a clue as to just what they did. If the 1099R is indeed incorrect I would insist on a corrected version and not arbritrarily change anything on my own.
I do know that some of these 1099R transactions can get very tricky as to just how to handle. I know I have had situations that took me quite some time to understand and figure out. One time I knew what the result should be but for the life of me I could not figure out how to get things properly entered into the software to end up with the proper result. I dinged around for 5 minutes plus and the female client really got on my case which made me more nervous. She just couldn't understand why I should be having so much trouble inputting her 1099R information. She really got on my case to the point where I actually started shaking. Her husband could see I was about to lose it and suggested to his wife that she just let me do my job. I was just about at the point where I thought I was going to totally lose control and smack her when I finally figured it out.

[mactoolsix]

From the IRS

About missing or incorrect W2 or 1099-R:

If you do not receive your Form W-2 or Form 1099-R by January 31, or your information is incorrect on these forms, contact your employer/payer.

If you do not receive the missing or corrected form by February 14 from your employer/payer, you may call the IRS at 800-829-1040 for assistance. You must provide your name, address (including zip code), phone number, Social Security Number, dates of employment, your employer/payer's name, address (including zip code), and phone number. After February 14, the IRS will contact the employer/payer for you and request the missing form. IRS will also send you a Form 4852 (PDF), Substitute for Form W-2 or Form 1099-R, along with a letter containing instructions.

[taxea]

Form 8082 "Notice of Inconsistent Tax Treatment" when they report a different amount or different tax treatment. Be sure to include a statement of facts and that you have documentation that backs up the change/s.

[mactoolsix]

Not so sure that form will work for an individual?

Form 8082 "Notice of Inconsistent Tax Treatment" when they report a different amount or different tax treatment. Be sure to include a statement of facts and that you have documentation that backs up the change/s.

Use Form 8082 to notify the IRS of any inconsistency between your tax treatment of an item and the way the pass-through entity treated and reported the same item on its return. Also use the form to notify the IRS if you did not receive Schedule K-1, Schedule Q, or a foreign trust statement from the foreign trust by the due date for filing your return (including extensions).

[David1980]

Are you sure you can legally modify/alter what is actually on a Form 1099-R, especially for efiling ??

It's always been my understanding an ERO must exactly reproduce all data (to include recipient mailing address) as shown on a W2, 1099R, or similar. Right or wrong. Of course, if there IS an error, the preferred path is to obtain a corrected replacement document.

(Yeah, I tend to get antsy with most Circular 230 stuff. )

FE

You know, it's often made me curious. Publication 1345 covers two pieces of information that you must enter as they appear on the W-2. The taxpayer's SSN and the taxpayer's address. It's silent on other boxes. I know in a lot of software when doing multiple state returns you may need to modify the state wages to make it work. I've never felt bad about it, as long as the returns are correct. But it makes me think about "Can you modify the state amounts from what's on the physical W-2?" Never seen anything saying I have to enter them as-is.