Form 1099-R; Retirement Income & Early Withdrawal Penalty

Use this page as a guide when adding or entering a Form 1099-R. You will also find a Troubleshooting System Errors and System Limitations. Information on the Early Distribution Penalty in regards to how to find it and where it can be edited can be found here as well.

Form 1099-R & Exemption Page can be added by the following two ways: 

Option A: Select "Edit Return" on the Summary Page.
  Scroll through the list of supported Forms and Schedules and select Form 1099-R & Exemption Page.

        Then click "Add Forms".

 Option B: Add Form 1099-R Retirement Income & Exemption Page:
  Select "Income" from your list.

This will expand your Forms and Schedules included in your return.


Select "Add Income Form" to display all supported income forms available.


Select Form 1099-R & Exemption Page.

Entering Form 1099-R: 

First enter the Payer Federal Identification Number (EIN) of the Form 1099-R. Then select Save and Continue.

Next, enter the Payer Address. Click "To enter a Foreign Address" link to change the address entry boxes.

Select Save and Continue when finished.

Form 1099-R Input Page:

Enter the information into the corresponding boxes of the Form 1099-R. 

Edit the Payer Information, Federal EIN, or Taxpayer Information by clicking the pencil in the applicable section.

Type of IRA:

You must select what the Form 1099-R is from (Traditional or Roth IRA, SEP/SIMPLE, or not an IRA).

Override for Taxable Amount:

When the Taxable Amount Form 1099-R is blank (box 2a). You must “Override Taxable Amount” and enter the taxable amount.

Rollovers & Roth Conversions:

Enter any amount of the distribution rolled-over that does not have code "H" or "G" in box 7.

Rollovers to a Traditional and Roth IRA's are entered into the "Rollover Amount" box. 

"Roth Conversion Amount" will not be shown on Form 1099-R. Enter in this box any rollover amount that was converted to a Roth IRA. 

Other Details:

Distribution Code 3; Employer Paid Disability Income

Check the box to treat the Form 1099-R income as wages when a Distribution is a Disability Pension, Code 2 or Code 3 will be in box 7 of the Form 1099-R. If retirement age set by the employer/payer has not been reached. 

Enter the current year taxable amount of the Distribution that has Code "P" in box 7 of the Form 1099-R. Do not use this box if box 7 is code 8 (excess deferrals). 

Distributions Treated as Wages:

Distribution Code 3; Employer Paid Disability Income

When retirement age has not been reached, disability distributions are treated as earned income, and the taxable amount will be included with wages (form 1040, line 7). Once retirement age is reached, disability distributions are treated as normal distributions, and the taxable amount will be included with pensions (form 1040, line 16b). (Distribution Code 3 retirement age is determined by the taxpayers Employer and can be before or after age 59-1/2)

Distribution Code 8, 8 A, 8 1, 8 2, & 8 4  Excess Contributions Plus Earnings/ Excess Deferrals

When box 7 has a code "8" the taxable amount (box 2) is treated as ordinary income, and will be included with wages (form 1040, line 7).
Anytime "code 8" has either an "A", "1", " 2", or "4" next to it, the taxable amount (box 2) the “Double Taxation Rule” is required.

Double Taxation Rule - 
This is when the taxable amount (box 2) is included in your ordinary income (form 1040, line 7) and included in your pension income (form 1040, line 16b) in the same year. 

Additional Tax on Early Distributions:

The Early Withdrawal Penalty will automatically populate when a code is entered into box 7 that requires a distribution to have the additional tax.

After completing the Input Page and clicking “Save and Continue the Additional Tax on Early Distributions Exception page will be available.

The Additional Tax on Early Distribution Exception will display any Distributions subject to penalty. 

     Click the pencil to enter the Penalty Exception Page. 
     Caution Any amount entered within this section will change Line 59 of the 1040

Insurance Premiums for Retired Public Safety Officers:

Eligible retired public safety officers can exclude up to $3,000 of their Distribution that was used to pay for certain qualified insurance premiums. 
Retirement Age must be met, unless the Distribution is Employer Disability (code 3 or code 2) and the applicable box is checked in the Form 1099-R Input page.

Troubleshooting System Errors:

Any Errors will generate once Save & Continue is selected. You will be unable to Save the Form 1099-R until the error is corrected. Depending on the issue creating the system error, most errors can be corrected but not all. See system limitations below for  such  cases.

Common Issues:

IMPORTANT: This is not to be used as tax advice. Please see the IRS instructions for Form 1099-R or IRS Publication 575  Pension and Annuity Income for more information. This is not a complete list of possible issues. Only the most common issues/errors.

Issue: Form 1099-R does not have a Taxable Amount (box 2a). 
   - You must enter the taxable amount into the Override Taxable Amount box. 

Issue: The distribution is not carrying over to the correct place on tax return. 
Depending on the issue, check your the following of your Form 1099-R entered:
   - IRA Checkbox
   - Box 7 code
Issue: The Distribution income missing from state return.
    - Check the correct state has been selected for the Form 1099-R. 
Issue: The amount entered for Insurance Premiums for Retired Public Safety Officers is not being deducted from taxable distribution total.
    - Box 7 has code 1 entered. Code 1 does not qualify for this. 

System Limitations

Issue: Federal Withheld cannot be more than the Taxable Amount. 
           -You will not be able to use this system if Federal Withholding is more than the Taxable Amount in box 2a.