1099 r

[liberty]

I use proseries pro, just finished a return. There is a 1099 R box 7 code 8. I did not show up on 1040 line 16b. It is taxable, right? do I have to override on 1040 line 16a and 16b?

[Rapid Robert]

I use proseries pro, just finished a return. There is a 1099 R box 7 code 8. I did not show up on 1040 line 16b. It is taxable, right? do I have to override on 1040 line 16a and 16b?

I haven't done one of these for a while, but maybe it is showing up on Line 7, since it was actually compensation? This is a 401(k) plan, I'm guessing. You should not have to override anything.

See also instructions for Form 1040, which state this about Line 7: "Corrective distributions from a retirement plan shown on Form 1099-R of excess salary deferrals and excess contributions (plus earnings). But do not include distributions from an IRA* on line 7. Instead, report distributions from an IRA on lines 15a and 15b."

So was this 1099-R for an IRA or not?

[mastertaxguy]

Code 8

I use proseries pro, just finished a return. There is a 1099 R box 7 code 8. I did not show up on 1040 line 16b. It is taxable, right? do I have to override on 1040 line 16a and 16b?

A review of The Tax Book Individual and Small business edition reveals the following:

"[code] 8 Distribution from an IRA to pay for higher education expenses of the taxpayer, spouse, child, or grandchild. Qualifying expenses
include tuition, fees, books, supplies, equipment, and room and board if at least a half-time student. [IRC §72(t)(2)(E)]
Caution: To qualify, expenses must be paid in same year as IRA distribution. (Duronio, T.C. Memo. 2007-90)"

Page 13-3.

I suspect you need to make some additional inquiries.

[Rapid Robert]

You are confusing Form 5329 codes with 1099-R codes. The OP was asking about 1099-R code 8.

[John of PA]

My take here is code 8 is removal from a plan; an excess contribution (the amt contributed was over the limit). Taxable if the amount was deducted when it originally went in and not taxable if it was not deducted when it originally went in. Interest earned by the money while it was in the plan has to also come out as taxable.

[Rapid Robert]

My take here is code 8 is removal from a plan; an excess contribution (the amt contributed was over the limit). Taxable if the amount was deducted when it originally went in

Agree; and if it was a 401k plan than obviously it was deducted from wage income originally, so that's where it goes back in as taxable. There is a slightly different code that means essentially the same thing as code 8 but for a prior year (requires amendment), because the excess came out too late.

This is not that rare of a situation e.g. Highly Compensated Employees (HCE) when the plan fails the tests for HCE participation. There should not be any need for an override in the software.

[mastertaxguy]

You are confusing Form 5329 codes with 1099-R codes. The OP was asking about 1099-R code 8.

Opps. Thanks for pointing that out.