Federal Taxable Income

Forum|Forum|6 years ago
March 10, 2020
8 replies
44 views

I received something I've never gotten in all my years I've been doing taxes. Client has a 1099-R with income in box 1 and 2; no Federal tax withheld; a Box 7 code of 4; the IRA/SEP/SIMPLE box is checked.

Received the income (split between three heirs) from the death of his mother.

Having never seen this before (12 years in business), I am thinking that this is taxable income due to the IRA box being checked. I have found in research that payments from insurance proceeds is normally not taxable. But with this coming from an IRA, that it is taxable.

Anyhelp would be appreciated.

Learn something new every year.

Michael Mincemoyer

ProSeries Basic

This topic has been closed for replies.

Best answer by Just-Lisa-Now-

They inherited an IRA and cashed it out (or took a distribution), its taxable income, yes.

I see them all the time.

Just-Lisa-Now-

Answer

Intuit Community Champion

They inherited an IRA and cashed it out (or took a distribution), its taxable income, yes.

I see them all the time.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

F

ForknowledgeAuthor

Level 2

Thank you for the confirmation. These clients will have a surprise this year.

IRonMaN

Level 15

Your thinking is correct, it's taxable. Insurance proceeds aren't taxable but traditional IRA distributions always are.

Slava Ukraini!

F

ForknowledgeAuthor

Level 2

Thank you for the information. A tax surprise awaits this client.

dd4vols

Intuit Community Champion

@Forknowledge the bigger surprise is that you have been preparing tax returns for 12 years and this is the first one you have seen. Very common...routine type distribution. See several each year.

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