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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13323
Experience:  15years with H & R Block. Divisional leader, Instructor
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i have a client that has a code 3 on her 1099-R and her box

Customer Question

i have a client that has a code 3 on her 1099-R and her box 2a says unknown how to fix that
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.
Hello,Code 3 is for Disability. This indicates that the distribution is due to disability and is not subject to the 10 percent additional tax. Depending on the specific type of plan that is making the distribution, you may be required to complete Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, when you file your Form 1040.Some employers report qualified disability income on Form 1099-R regardless of the taxpayer's age. If Form 1099-R, box 7, indicates a distribution code of 3, it is a disability distribution. You must confirm employers' minimum retirement age. If the taxpayer is under the retirement age, you must take steps in the software to ensure the income is properly reflected as wages on Form 1040, line 7.
Customer: replied 1 year ago.
What do when Box 2b says unknown?
Expert:  Robin D. replied 1 year ago.
If they are not of retirement age and this from an employer account then it is taxable
Expert:  Robin D. replied 1 year ago.
If this is from their own IRA it is still taxable just does not have the 10% penalty.
Expert:  Robin D. replied 1 year ago.
The box 2 unknown is on most 1099Rs
Customer: replied 1 year ago.
My tax client has her 1099R from Office of Personnel Management. Box 1 says $21,648.00. And box 2a says Unknown. So what do I put in box 2a? My client thanks I should take a percentage of this. Her total employee contribution in Box 9 is 40,059.00. She was eligible to retire at 55 and 4 months since she was Federal Employee. What do I do and how can I explain it to my client.
Expert:  Robin D. replied 1 year ago.
Yes you would use the contribution amount to reduce the taxable portion of the distribution. You use the Simplified Method to figure the tax-free part of the payments. This method is covered in Publication 575. Complete worksheet A in the back of this publication to figure your taxable annuity for 2014. Be sure to keep the completed worksheet; it will help you figure your taxable annuity next year.
Customer: replied 1 year ago.
I am needing help understand the Worksheet A Simplified Method to figure the taxable amount.Total Gross Distribution was 21648.00
Total Employee Contributions - 40059
She was eligible for retirement at the age of 55 and 4 months
Expert:  Robin D. replied 1 year ago.
I can address a specific question for you but I cannot complete the calculations for you on the worksheet unfortunately

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