Taxable amount undetermined

[taxgirl]

New client just came in with a 1099-R with taxable amount blank and box checked "taxable amount not determined." Previous preparer has filed with zero taxable where typically I input the whole distribution as taxable.

What do you do?

[Rapid Robert]

New client just came in with a 1099-R with taxable amount blank and box checked "taxable amount not determined." Previous preparer has filed with zero taxable where typically I input the whole distribution as taxable.

What do you do?

I look to see whether the IRA box is checked, I also look at the distribution code(s) and Box 9b and ask the taxpayer a question or two. There would be relatively few cases where none of the distribution would be taxable in my experience.

[Burke]

You did not give us the distribution code, so we don't know whether this is a traditional IRA (fully taxable), a company pension or tax-deferred annuity to which he may have made after tax contributions (partially taxable), or if it is a ROTH and perhaps not taxable at all. Additionally, when the Taxable Amt Not Determined designation is present, it may only mean that the custodian cannot figure out what the taxable portion may be. This is usually due to the account originally being set up at another institution and transferred or rolled over. Only if it has been in the distributing custodian's control the whole time, would they be required to track basis. So it is up to the taxpayer to determine that.

[taxgirl]

It is coded 7 normal distribution and the IRA box is not checked. I did talk to her about it...

[taxmandan]

The custodian doesn't know if there is basis in the account, hence they can't determine taxable amount. If it's a OPM pension and there is an amount in box 9b that is their basis and you need to use the Simplified method to determine taxable amount. This means lots of questions to the client to figure out how much is taxable, it doesn't mean none of it is taxable like the previous preparer did.

[Burke]

It is coded 7 normal distribution and the IRA box is not checked. I did talk to her about it...

In that case, it is unlikely it could be considered fully non-taxable. The client has some homework to do. If it originated at another custodian, she can usually get the information she needs from them. So, do you know if it is a 401(k) plan from an employer, a regular pension plan, or a tax-deferred annuity? She should have records somewhere as to what this is. How long has she been receiving it? And does she have her old tax returns? You cannot do the 2017 tax return until this is determined. I am going to assume this is not from the Office of Personnel Mgmt (civil service employee) or Railroad Retirement Board. What company/organization did it come from? Has she ever received correspondence about this?