I'm looking at a return that a previous preparer did. There was a 1099r with a gross amount of 30,000, taxable amount not determined, coded 2. The preparer did not include this in taxable income. Does anyone know how this could have been done?
incorrectly most likely
The taxpayer wife is diabled but it is not coded 3. I know he is exempt from the penalty becasue it is coded 2. I know iras generally have zero basis becasue almost all contributions are an above the line deductions. Do people always get a deduction for contributing to a pension? It is not coded an ira/sep/simple. Thanks again.
Rolled over?
It is not a rolled over or it would have been coded G. The client got the same exact amount last year. Honestly I'm not sure how anyone could think they have basis in this?
Seems to me that just about anything could be coded 2. I would take it to mean that whoever prepared the 1099-R had insufficient information. Ask the t/p what really happened.
Other then having basis in this, which would mean nondeductible contributions. Is there any way that this could not be taxable? I know it is not subject to the 10% penalty, but not taxable at all.
now you are throwing stuff at wall--whose pension?IRA? which--whose husband or wife
if wife disabled no penalty--but you already stated code 2-so mute
whoever issued the form apparently does not know if there is a basis in the IRA---or does not know if aftertax contributions to pension
talk to your client --see if any knowledge of anything that could be basis and/or if record exists of any after tax contributions
what IRMN is suggesting is if it was rolled over in the past--the new institution does not know--so codes taxable amount not determined
Even for distributions that do have basis, the 1099-R preparer won't necessarily know what that basis it is unless they've seen all the prior tax returns and run the numbers. This is your job, not the custodian's.
poster is saying not coded IRA--so this must be a pension
i have city employee pensions here--that were turned over to the state years ago--after tax contributions were never entered-in those cases i file a poa and info request with the state retirement board--they go searchd out the old paper records and send them to me--if after tax contributions exist--we figure the non taxable amounts--pro series does have a worksheet to do this--once you've entered the info-it carries from year to year
if you can't find a basis or after tax contributions-or your client does not want the hassle
its all taxable
correct taxguy it is a pension. Thanks so much for the help guys!
>>>poster is saying not coded IRA--so this must be a pension<<<
It could be a partially taxable annuity distribution, could be a partially nontaxable military thingy. We don't know what it is, exactly, and I'm thinking someone doesn't want to do the legwork to find out. Fine, don't ask, just pay the tax to The Man.
i never would want to see an annuity coded like that--i couldn't even imagine the story behind that-bankruptcy?--i haven't seen a goverment takeover on a private pension in years-there is a website for that however
>>>i never would want to see an annuity coded like that<<<
Neither have I, Henry. I'm really not trying to be nitpicky here, but $30K (twice) is a lot of taxable income to pick up based on a 1099-R coded only 2, and "taxable amount not determined." In your other post, you mentioned some other possibilities. I wou nail it down tight. Just sayin' :)
I was reading publication 575. My conclusion so far is if the taxpayer's contribution were not tax deffered, then this probable is not taxable. Last year was the first year that he got a distribution. The contributions would not be tax deffered if it was a non qualified plan. If it was a qualified pland then the contributions would be tax defferred and all of this would be taxable. I'm cringing becasue I know the TP will have no clue.
I suspect this is 100% taxable AND your client will get a nastigram from IRS for not reporting it in 2010.
Pension distribution of a disabled person under retirement age is usually coded with code 3 and appears as wages on line 7. Did previous preparer list on line 7? Then once taxpayer turns 55, code 2 appears and when they reach age 60 code 7 appears. So maybe it was code 3 last year and on line 7 where it belonged.
Have you actually done as a few of these fine people have suggested and asked your taxpayer(s) any questions about this? It is an excellent idea and one you seem to be unwilling to do. They are the ones with the form and the income and presumably they know something about the source. Why don't you try asking them a question or two?
