1099R code 6 and 7D

[ILLMAS]

TP received two 1099R's:

Box 1: 10,000

Box 2a: 1,100

Box 2b: Total distribution

Box 5: 8,900

Box 7: 7D

I see box 5 is the difference between 1 & 2a, however the second 1099R looks like this:

Box 1: 25,000

Box 2a: blank

Box 2b: Taxable amount not determined

Box 5: 22,411

Box 7: 6

Right now, ATX is taxing the $8,900 and the full $25,000, however out of the $25K, TP kept $2,589 and the rest was put into a long-term care insurance + the $8,900 totaling $31,311.  Since I can back track what should be taxable for the second 1099R, would I be okay putting the $2,589 on box 2a?

[Lion EA]

Your software should have a worksheet to compute the taxable amount when Taxable amount not determined is checked. Document your computations.

[ILLMAS]

10 minutes ago, Lion EA said:

Your software should have a worksheet to compute the taxable amount when Taxable amount not determined is checked. Document your computations.

I am using ATX, I will look for that worksheet, thanks.

[Lion EA]

I don't use ATX, so someone will jump in here with ATX-specific instructions. Used to be a bunny hop years ago when I used ATX for entities at HRB.

[GraceNY]

5 hours ago, ILLMAS said:

TP received two 1099R's:

Box 1: 10,000

Box 2a: 1,100

Box 2b: Total distribution

Box 5: 8,900

Box 7: 7D

I see box 5 is the difference between 1 & 2a, however the second 1099R looks like this:

Box 1: 25,000

Box 2a: blank

Box 2b: Taxable amount not determined

Box 5: 22,411

Box 7: 6

Right now, ATX is taxing the $8,900 and the full $25,000, however out of the $25K, TP kept $2,589 and the rest was put into a long-term care insurance + the $8,900 totaling $31,311.  Since I can back track what should be taxable for the second 1099R, would I be okay putting the $2,589 on box 2a?

My 2 ¢.  The 1st 1099R looks like the TP cashed in a non-qualified annuity.  TP had made contributions of $8,900 (Box 5) and cashed it out for $10k (Box 1).  Only the $1,100 should be taxable.  I just did one of these recently in ATX and only the box 2a amount showed up as taxable.  Check your input.

The 2nd 1099R is a nontaxable exchange (Box 7, Code 6). I am confused by the fact that the company checked the box "taxable amount not determined."  If it was truly a non-taxable exchange, then none of it would be taxable and that's why Box 2a was blank.  Perhaps you need to get more info from the TP.  It may be that the TP exchanged an annuity, life insurance or LTC policy for a new LTC policy or a hybrid life insurance/LTC contract.  Maybe the $25k that went to the company was too much and they refunded the $2,589?  Also had a similar one recently.  It was an exchange between 2 non-qualified annuities.  Box 1 $94K, Box 2a blank, Box 2b Total distribution box checked, Box 5 $61k, Box 7 Code 6.  I believe that the fact that yours had the "taxable amount not determined" box checked is what's causing ATX to tax the whole $25K. 

If the TP did not received the $2,589 as a refund and actually received the whole $25K, the company should not have put a Code 6 in box 7.  Then, I would put the $2,589 in as the taxable amount.

 

 

[ILLMAS]

22 hours ago, GraceNY said:

My 2 ¢.  The 1st 1099R looks like the TP cashed in a non-qualified annuity.  TP had made contributions of $8,900 (Box 5) and cashed it out for $10k (Box 1).  Only the $1,100 should be taxable.  I just did one of these recently in ATX and only the box 2a amount showed up as taxable.  Check your input.

The 2nd 1099R is a nontaxable exchange (Box 7, Code 6). I am confused by the fact that the company checked the box "taxable amount not determined."  If it was truly a non-taxable exchange, then none of it would be taxable and that's why Box 2a was blank.  Perhaps you need to get more info from the TP.  It may be that the TP exchanged an annuity, life insurance or LTC policy for a new LTC policy or a hybrid life insurance/LTC contract.  Maybe the $25k that went to the company was too much and they refunded the $2,589?  Also had a similar one recently.  It was an exchange between 2 non-qualified annuities.  Box 1 $94K, Box 2a blank, Box 2b Total distribution box checked, Box 5 $61k, Box 7 Code 6.  I believe that the fact that yours had the "taxable amount not determined" box checked is what's causing ATX to tax the whole $25K. 

If the TP did not received the $2,589 as a refund and actually received the whole $25K, the company should not have put a Code 6 in box 7.  Then, I would put the $2,589 in as the taxable amount.

 

 

Thanks, I am looking into this, TP is not too happy with the financial advisor at the moment.