Exploring Form 1099 R Lets Explore Log onto

Exploring Form 1099 -R

Let’s Explore ● Log onto your Tax. Slayer Account ● Begin a new return for Harriet Jones 2

• Begin a new return for Harriet Jones • Lawyer • Single • • • 3 One Dependent Daughter Candace Jones SSN: 564 -00 -0011 Date of Birth 03/13/2002 Single, high school student

Filing Status ● What is Harriet’s best Filing Status? Why? ● Open Pub 4012 to the Tab where this is found − Tab B-6 4

Make a Table On a sheet of paper create the following table: Block 7 5 AGI Refund

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Block 7 Code 2 ● What does Code 2 mean? ● Where can we find the Codes? − Back of the form (very small print) − Pub 4012 (Check the Table of Contents) Then turn to the Tab 8

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Block 7 Code 2 What is Harriet’s AGI? What is Harriet’s refund? Fill in your table 10 Block 7 AGI Refund Code 2 $33, 600 $1, 829

Commercial Annuity ● If Harriet had bought the annuity, what would look different? − Her own money coming back would be in Block 5 and would be the difference between Block 1 and Block 2. 11

In some situations, the taxable amount can even be zero. Do NOT enter this form today. 12

Block 7 Code 3 ● What if Block 7 was Code 3? ● What probing questions would you ask? Why? ● Harriett tells you the minimum retirement age is 57 ● Edit the 1099 -R to make these changes 13

Block 7 Code 3 What is Harriet’s AGI? What is Harriet’s refund? Block 7 AGI Refund Code 7 $33, 600 $1, 829 Code 3 $33, 600 $2, 735 What changed on her Form 1040? 14

Let’s Discuss ● Harriett says she expects her interest income to double next year and wants to know how that will affect her return? − Her AGI would increase and she would lose EIC − Why? − Open Pub 4012 to Tab I-3 and review 15

Let’s Check It Out ● Edit the 1099 -INT by doubling the interest to $5200 ● Note the change to the Refund ● Change it back to $2600 16

Let’s Discuss Something Else ● What if her 1099 -R (code 3) had an entry in block 9 b, how would that affect her return? − No effect – Why? − Taxpayers do not begin to recover their contributions until they reach the minimum retirement age and the disability pension becomes a normal pension − See Pub 17 Chapter 5 Disability Pensions 17

Block 7 Code 1 ● What if Block 7 was Code 1? ● What probing questions would you ask? Why? − What are some exceptions to the 10% penalty? − Open Pub 4012 to Tab H-2 and let’s review 18

Block 7 Code 1 ● Harriett tells you she needed to money to pay normal living expenses ● Edit the 1099 -R to make these changes 19

Block 7 Code 1 What is Harriet’s AGI? What is Harriet’s refund? Block 7 AGI Refund Code 7 $33, 600 $1, 829 Code 3 $33, 600 $2, 735 Code 1 $33, 600 Payment Due $1, 271 What changed on her Form 1040? 20

Block 7 Code 1 Self-Rollover ● What if Harriett said she withdrew the money but changed her mind and put it back into an IRA? ● What probing questions would you ask? Why? − Open Pub 4012 to Tab D-34 and let’s review the rules 21

Block 7 Code 1 Self-Rollover ● Your interview indicates that Harriet met all the selfrollover rules ● Edit the 1099 -R to make these changes 22

Block 7 Code 1 Self-Rollover What is Harriet’s AGI? What is Harriet’s refund? Block 7 AGI Refund Code 7 $33, 600 $1, 829 Code 3 $33, 600 $2, 735 Code 1 $33, 600 Payment Due $1, 271 Code 1 Rollover $2, 600 What changed on her Form 1040? 23

Two Odd-Looking 1099 -Rs ● Railroad Retirement Board − Treat like Social Security − Treat like a Form 1099 -R (3 copies) − Usually requires the Simplified Method 24

Two Odd-Looking 1099 -Rs ● Office of Personnel Management (OPM) − Block 5 usually is health insurance premium − Enter on Sch A or as PSO deduction if appropriate 25 Usually has an entry in block 2 a even with an entry in block 9 b

One Last Thing - Scope ● Which of the following Box 7 Codes are out of scope? 1, 4, 6, 8, A, 7 D, G, K, Q, U 26

One Last Thing - Scope ● Which of the following Box 7 Codes are out of scope? 1, 4, 6, 8, A, 7 D ? ? , G, K, Q, U ● Open Pub 4012 Tab D-34 − Are there conflicts to the above? − Where do you go to be sure? 27

Scope Manual 28

Questions? 29