Annuity taxable in 2013 or 2014?

[Kram BergGold]

Client is getting a full payout on an annuity. It is not clear if the check will be cut on 12/31/13 or sometime in January 2014. If they cut the check on 12/31/13 there will be a 2013 1099-R. Are we stuck using the same rule as wages, i.e it is taxable in 2013 or can we report it and back it off and then claim it in 2014 like you would a self employment payment?

[Burke]

I think you have to claim it in 2013. Had a case two years ago, when the annuity company issued a check in November -- to correct annuitant but wrong address, which had been changed in their records. Annuitant in other state with that address got my client's check and vice-versa. Took until March of following year to get it straightened out, i.e, checks voided, redrawn, and sent to right annuitant address. Still was reported in prior year via 1099-R, with tax withholding!

[ATSMAN]

Go with the year the 1099-R was issued. Otherwise you are sure to get a CP2000.

I had a client who got a large pension payout check at the end of January but the 1099-R was for the previous year. He did not tell me about it and sure enough a CP2000 was received.

[Gene V]

Client is getting a full payout on an annuity. It is not clear if the check will be cut on 12/31/13 or sometime in January 2014. If they cut the check on 12/31/13 there will be a 2013 1099-R. Are we stuck using the same rule as wages, i.e it is taxable in 2013 or can we report it and back it off and then claim it in 2014 like you would a self employment payment?

I would see if the check falls under the Constructive Received Rules;

Pub. 538

Constructive receipt. Income is constructively received
when an amount is credited to your account or made
available to you without restriction. You need not have
possession of it. If you authorize someone to be your
agent and receive income for you, you are considered to
have received it when your agent receives it. Income is
not constructively received if your control of its receipt is
subject to substantial restrictions or limitations.

Example. You are a calendar year taxpayer. Your
bank credited, and made available, interest to your bank
account in December 2012. You did not withdraw it or enter
it into your books until 2013. You must include the
amount in gross income for 2012, the year you constructively
received it.

You cannot hold checks or postpone taking possession
of similar property from one tax year to
another to postpone paying tax on the income.
You must report the income in the year the property is received
or made available to you without restriction.

[ATSMAN]

Depending on the results, you still have to deal with the issuer of the 1099-R to get it corrected and chances are they may disagree and not go along. From all my years if the check was dated 12/31/20xx you are getting a 1099-R for xx year. Does not matter they actually mailed it to you in January of the following year.

[FEDUKE404]

Form 1099-R generally rules

Depending on the results, you still have to deal with the issuer of the 1099-R to get it corrected and chances are they may disagree and not go along. From all my years if the check was dated 12/31/20xx you are getting a 1099-R for xx year. Does not matter they actually mailed it to you in January of the following year.

You are likely gonna end up with egg on your face for even ASKING for a corrected (next year) Form 1099-R from a provider when the funds were actually "paid" during December of 201x.

And for most individuals who receive retirement payments, the "constructive receipt" approach will also (if challenged) go over like a lead balloon.

FE