1099R death benefit

[Possi]

1099R death benefit (4). No taxable amount is computed. If I didn't start the simplified general rule from the beginning, AND the new client came to me with 100% taxable in prior years, (as previous preparer did the return), I have always followed that, and put 100% as taxable.

Today, I am wondering if I have done a disservice to my client. Is the figure in Box 5 non-taxable? Should I have been backing that out of the taxable amount?

I must be tired. I hope nobody thinks I'm a newby. geez

[ATSMAN]

You need more information any time box 2b is checked.

Box 5 will show the basis in many situations and if box 1 has an amount and box 2a is blank I ask a lot more questions to find out where the distribution came from. What types of contributions (pre tax or post tax or both) funded that etc.

Not to late to do 1040x for the last 3 years once you figure out what you are dealing with.

[Possi]

Not a clue

You need more information any time box 2b is checked.

Box 5 will show the basis in many situations and if box 1 has an amount and box 2a is blank I ask a lot more questions to find out where the distribution came from. What types of contributions (pre tax or post tax or both) funded that etc.

Not to late to do 1040x for the last 3 years once you figure out what you are dealing with.

This little old lady doesn't have a clue. I guess it's best to include it all.
The reason I even questioned it was because I see so many coming in with the taxable amount computed and it's offset by that box 5. Those are probably variable annuities.
Hey, thanks for the response. I really appreciate it.

[Lion]

Call the telephone number on the 1099-R, with client there or conferenced in. Or, if she has a relative or home care worker with POA, have them call.

[Roland Slugg]

One of the items on my wish list for improvements to tax forms is that when the taxable amount for box 2a of form 1099-R is zero, that the issuer be required to enter 0.00 in that box. Nevertheless, when box 2a is blank, that's a pretty strong indication that the taxable amount is, indeed, zero. I have also found that the amount in box 5 is almost always equal to the difference between the amounts in boxes 1 and 2a, although sometimes it's not exactly the same.

Based on the facts in your OP, I would conclude that the taxable amount was zero.

[Burke]

Today, I am wondering if I have done a disservice to my client. Is the figure in Box 5 non-taxable? Should I have been backing that out of the taxable amount?

Box 5 is non-taxable contributions. I always use that to figure net taxable income. Problem is, you need to know when it started to determine if there is any remaining basis. It would have started with the original pensioner/annuitant.

[taxea]

1099R death benefit (4). No taxable amount is computed. If I didn't start the simplified general rule from the beginning, AND the new client came to me with 100% taxable in prior years, (as previous preparer did the return), I have always followed that, and put 100% as taxable.

Today, I am wondering if I have done a disservice to my client. Is the figure in Box 5 non-taxable? Should I have been backing that out of the taxable amount?

I must be tired. I hope nobody thinks I'm a newby. geez

To me it depends on how long ago the deceased spouse retired. The non-taxable portion may have already been used. If you are concerned ask the client for the date of retirement of the spouse. If your more than concerned ask for a 3rd Party 7216 then contact the issuer and get the docs that tell you the date of retirement, the total balance in the account at retirement and the employee's total contribution at retirement. You can then do the bottom of the 1099r to determine whether there is any non-taxable income left.