Form 1099-R is a U.S. Internal Revenue Service form that’s used to report distributions from pensions, annuities, retirement/profit-sharing plans, IRAs, and insurance contractors for each person to whom you have made a designated distribution or are treated as having made a distribution of $10 or more from profit-sharing or retirement plans. This could also include any individual arrangements, annuities, pensions, insurance contractors, survivor income benefit plans, permanent and total disability payments under life insurance contractors, charitable gift annuities, etc. Keep reading for 1099-R filing tips from OnlineFileTaxes.com.

1. Your taxable amount may not be fully ‘taxable-focus’ on Box 2a – Usually, your plan administrator must reflect the taxable amount of your distribution in Box 2a. Be aware that the following are non-taxable transactions, which would be reported in Box 1, but not Box 2a:

   1. Direct rollovers between qualified plans, 403(b) plans, 457(b) plans, traditional IRAs, and simple IRAs
   2. The principal on a return of excess contribution from an IRA that’s removed by the deadline (the excess amount and earnings are reported in Box 1, but only the earnings are reported in Box 2a)
   3. Any recharacterized IRA contributions or Roth conversions
   4. Distributions of after-tax amounts from qualified plan

2. You will need to apply the non-taxable treatment on your return if an amount is reported in Box 2a – Let’s look at an example of this. You receive a rollover eligible distribution and you rolled over the amount within two months. The IRS requires that you report such amount on Lines 15a and 15b if the distribution was made from an IRA or Lines 16a and 16b if the distribution was made from a qualified savings plan. Maybe you receive a distribution of $15,000 from your traditional IRA last year, but you rolled over the amount within the allocated 60 days. The issuer of your 1099-R must report the amount as taxable. When you file your return, be sure to do the following:

   1. Enter $15,000 on Line 15a

   2. Enter ‘rollover’ next to Line 15b

   3. Enter ‘0’ on Line 15b

3. Non-taxable amounts are attributed to after-tax contributions made to your qualified plan – Here’s the thing: If the distributions were made from a qualified plan or 403(b) plan, then there’s a good chance the 1099-R correctly shows the non-taxable amount. Just know that you may have to file Form 8606 with your return in this case. Form 8606 includes a formula that helps you determine the taxable portion of your distribution. Filing this additional form will help the IRS understand how you got to the current figure.

4. Stay accurate with any recharacterization – Let’s say that you converted an amount that water recharacterized down the road. If a conversion for last year is recharacterized this year, the 1099-R for recharacterization will not be issued until January of next year. Not only that, but the tax reporting for the recharacterization will likely not correspond to the tax reporting for the conversion. Consider the hypothetical in which you converted $200,000 last year and, due to market losses, the account was valued at $150,000 when it was recharacterized. You should expect to receive a 1099-R form and a 5498 showing $150,000 for the recharacterization. Still, you would treat the entire $200,000 as non-taxable because the entire amount was recharacterized for tax purposes. In the event that you characterize less than 100 percent of the conversion, you will need to file IRS Form 8606.

Unless the form shows that you had taxes withheld, it’s not required that a 1099-R be filed with your return. It’s a good idea, however, to keep a copy of your account statement that includes the transaction for which the form was generated. This way, you have what you need should a transaction review come up down the road.

Stress-Free Way to File 1099 Forms

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