If you have a pension, annuity, profit sharing, IRA or other retirement plan, you should receive IRS Form 1099-R if you've had any taxable distributions for the given tax year. The form is completed and sent to you by your employer, who is required to supply a copy of this form to the IRS. You'll receive the form only if you've had a distribution from your plan. To report the information on your tax return, enter your gross distribution, taxable amount, any taxes that your employer withheld and information relating to the type of distribution, among other information.
Your 1099-R will include information on gross distributions, taxable amounts, and tax withholdings. This information can be used to help complete your individual tax return.
Finding Form 1099-R Box 1, Gross Distribution
If you have received multiple 1099-R forms, you'll need to combine some of the information to complete your tax forms. For example, Form 1099-R, box 1 shows the gross distribution from your plan. Add up all of the box 1 amounts if you have multiple forms and report the total on Form 1040, box 15a or box 16a, depending on whether you're reporting a taxable distribution from IRAs, pensions or annuities. Use lines 11a and 12a for these amounts on Form 1040A.
Obtaining Information For Form 1099-R Box 2a and Box 2b
Unless your Form 1099R, box 2a "Taxable amount" is empty, you must include the amount in this box as income on your individual tax return. On Form 1040, use line 15b or line 16b; on Form 1040A, use line 11b or line 12b, depending on the type of distribution. In the case of certain types of investment accounts, such as annuities, you might have a taxable portion and a portion that's excluded from taxes because you had already paid taxes on the money before you paid it into the plan. If Form 1099-R, box 2b has the "Taxable amount not determined" box checked, you may need to consult with your tax adviser to calculate the taxable portion of your investment. You can also find more information on this in IRS publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) or IRS Publication 575, Pension and Annuity Income.
Looking At Taxes Paid For Form 1099-R Box 4 Taxes Paid
If you've already paid taxes, most likely in the form of money withheld from your distribution, you'll find this amount in box 4 on your Form 1099-R. Enter this amount on Form 1040, line 62 or Form 1040A, line 36. Don't overlook this step because if you don't include this amount on your tax forms, you could end up double-paying taxes on at least a portion of your distribution.
Reporting Additional Circumstances
Find box 7 on each of your 1099-R forms and look for any code numbers or letters. You may need to research the reason for the code if one is present. For example, if you see code number 1, this shows that your distribution was made before your retirement age and did not qualify for any exceptions. This generally means you'll need to pay a 10 percent penalty to the IRS. In this case, you'll also need to complete IRS Form 5329 – Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts and include it with your tax return.
If box 7 contains different 1099 distribution codes, you can locate code explanations in the IRS instructions for Forms 1099-R and 5329. You can also use Form 5329 to indicate that your distribution type qualifies for an exception to the tax penalty for distributions before age 59 1/2. You can find the code for each exception type in the instruction booklet for Form 5329.
Cynthia Gaffney has spent over 20 years in finance with experience in valuation, corporate financial planning, mergers & acquisitions consulting and small business ownership. She has worked as a financial writer for online finance publications since 2011, including eHow Money, The Motley Fool, and Sapling.com. She has also edited for several online finance publications, including The Balance, Opposing Views:Money, Synonym:Money, and Zacks.com. A Southern California native, Cynthia received her Bachelor of Science degree in finance and business economics from USC.