1099R as Wages

[quicksam]

Taxpayer went out on disability before his minimum retirement age and I always filed the 1099R wages as income on line 7 as I should have. The Married couple always received EIC. Distribution code was a 3.

The Taxpayer died and the wife still draws on the husbands disability benefits and receives a 1099R with the distribution code of 4 for death.

She thinks she should still get the EIC by reporting it as wages on line 7.
I don't agree with her. I believe the husband was the only one who could have treated it this way.

Has anyone dealt with this or does anyone else have any input on this?

Lester

[Redneck]

Form 1040 Line 16 Year 2006

Form 1099R is reported on line 16 of the 1040 NEVER as wages on line 7

[taxmandan]

Learning opportunity

Taxpayer went out on disability before his minimum retirement age and I always filed the 1099R wages as income on line 7 as I should have.
Lester

Since it wasn't reported on a W-2, either the employer screwed up by not putting it on a W-2, or this isn't income from an employer's plan and thus not reportable on line 7. I would check the nature of the disability payments, they could be from an insurance plan (workman's comp??) and not from a pension plan.

[WhiteOleander]

Form 1099R is reported on line 16 of the 1040 NEVER as wages on line 7

This statement is incorrect. If someone begins receiving their pension because of disabilty and they have not reached retirement age, the 1099R is coded 3. This is reported on line 7 as wages. Not line 16.

However, to answer the question, I don't believe the distribution is still considered disablility. It is received now as a death benefit. And that would not be reported on line 7.

Someone else may have some other info on this. But, the surviving spouse's 1099R should be reported on line 16.

[JG EA]

QuickSam was correct, but

In the instructions for 1040 line 7 it says

'...include in the total on line 7:'

"Disability pensions shown on Form 1099-R if you have not reached the minimum retirement age set by your employer. Disability pensions received after you reach that age and other payments shown on Form 1099-R (other than payments from an IRA) are reported on lines 16a and 16b."

But, I also agree the the character of the payment has now changed and the survivor is not receiving the type of pension payments to go on line 7.

[Brad Imsdahl]

In addition to disability pensions reported on Form 1099-R, TTB, page 3-2 also mentions corrective distributions of excess salary deferrals and excess contributions (plus earnings) reported on Form 1099-R should go on line 7 of the 1040, not line 16.

Never say never in the tax biz.