You must use the General Rule explained in IRS Publication 939 to calculate the taxable part of Box 1 on your 1099-R if no taxable amount is listed in Box 2A so the correct amount of taxable income is reported on line 5b of Form 1040 or 1040-SR.
If your annuity starting date was after July 1, 1986, you may have to figure the taxable part of the distribution using the Simplified Method.
NOTE: If your Form 1099-R does show a taxable amount, you may be able to report a lower taxable amount by using the Simplified Method.
What is my annuity starting date?
Your annuity starting date is the later of the first day of the first period for which you received a payment, or the date the plan's obligations became fixed. This field is required.
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1. |
What was the first date of the first period for which you received a payment? |
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2. |
What was the date that your plan's obligations became fixed? |
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3. |
Enter the later of the dates on #1 and #2 above. This is your annuity starting date. |
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Should I use the Simplified Method?
It is required to use the Simplified Method if your annuity starting date (the date on line 3 above) was after July 1, 1986, and you used this method last year to figure the taxable part.
You must also use the Simplified Method if your annuity starting date (line 3 above) was after November 18, 1996, and BOTH of the following apply:
- The funds are from a qualified employee annuity, a qualified employee plan, or a tax-sheltered annuity plan (403(b) plan).
- At least one of the following is true on the date the annuity starts,:
- You were under age 75.
- You are entitled to less than 5 years of guaranteed payments. Your annuity contract provides "guaranteed payments" if a minimum number of payments is payable, even if you and any survivor annuitant do not live to receive the minimum. If that minimum amount is less than the total amount of the payments you are to receive during the first 5 years after payments begin, you are considered to be "entitled to less than 5 years of guaranteed payments". (See Publication 575 for the definition of guaranteed payment)
You must use the Simplified Method if your annuity starting date was after November 18, 1996, you meet Condition 1, AND you meet one of the conditions in Condition 2.
If you use the Simplified Method, you can do so within your account by clicking the link beside box 2 on your 1099-R entry screen. The Simplified Method Worksheet can be found in Form 1040/1040-SR Instructions if you prefer to do it by hand.
Are there restrictions on when the Simplified Method cannot be used?
The taxpayer cannot use the Simplified Method if
- the pension or annuity is a nonqualified plan, or
- they do not meet the conditions described above.
How do I access the Simplified Method Worksheet?
To access the Simplified General Rule Worksheet, from the Main Menu of the Tax Return (Form 1040) select:
- Federal
- Income
- 1099-R, RRB, SSA
- Add or Edit a 1099-R
- Enter your 1099-R information
- Select "Click here for options" under Box 2a entry
- Simplified Method Worksheet
This is a guide on entering the Simplified General Rule Worksheet into the TaxSlayer program. This is not intended as tax advice.