Entering Individual Form RRB-1099-R Railroad Retirement Board Benefits in Lacerte

Individual Tax Form RRB-1099-R Railroad Retirement Board Benefits.  Benefits differ from RRB-1099 in that they are non-social security equivalent benefits (NSSEB).

Solution:

RRB-1099-R benefits are treated as an annuity in most cases. To enter information from RRB-1099-R:

1. Go to Screen 13.1, Pensions, IRAs.
2. Enter the Payer Information.
3. Scroll down to the Other Information section.
4. Check the box, Railroad retirement benefits (RRB 1099-R).

RRB-1099-R Box 3:

The General Rule:

1. On Screen 13.1, Pensions, IRAs.
2. Scroll down to the General Rule section.
3. Enter RRB-1099-R Box 3 (Employee Contributions) information in Investment in contract (plus death benefit exclusion) (code 146)
4. Other applicable entries are needed in the General Rule section (i.e., Expected return).
5. See General Rule Worksheet in Forms or  IRS Pub 575 Pension and Annuity Income.

Simplified Method:

1. On Screen 13.1, Pensions, IRAs.
2. Scroll down to the Simplified Method section.
3. Enter RRB-1099-R Box 3 (Employee Contributions) information in, Cost in plan at annuity starting date (plus death benefit exclusion) (code 149).
4. Other applicable entries must be made in the Simplified Method section (i.e.,Annuity starting date, Age at annuity starting date).

• This information must be provided by your client.  See Simplified Method Worksheet in Forms or IRS Pub 575 Pension and Annuity Income

RRB-1099-R Box 4:

If no amount in RRB-1099-R Box 3, then the amount in RRB-1099-R Box 4 is fully taxable.

1. Enter RRB-1099-R Box 4 as the Gross Distribution and the Taxable Amount.

RRB-1099-R Box 5:

1. Go to Screen 14.1, Miscellaneous Income.
2. Enter the amount in, Tier 1 railroad retirement benefits (RRB-1099, box 5) (code 3) under the Social Security Benefits section.

• Lacerte calculates the taxable portion in the same way as taxable social security benefits (see below).

Note: Do not report amounts from Form RRB-1099-R on Screen 14.1, instead use Screen 13.1, Pensions, IRAs.

Lacerte calculates the taxable portion based on modified adjusted gross income. The program calculates modified adjusted gross income by taking the adjusted gross income from Form 1040, excluding taxable social security benefits, and adding any non-taxable interest income. Please note the following:

• When the taxpayer's status is MFS and lived with the spouse, make an entry in "Live With Spouse" on Screen 1, Client Information. The program eliminates the exclusion per IRS instructions.
• When the taxpayer and/or spouse has income earned in a foreign country, a U.S. possession, or Puerto Rico that is excluded from gross income, you must manually calculate the taxable amount of social security benefits using the worksheet in IRS Pub. 915 and enter the amount in "Taxable Social Security and Railroad Retirement [O]" (Screen 14.1, codes 4, 54).

If the taxpayer receives social security benefits in the current year and the taxpayer also has current year IRA contributions, the program calculates the taxable portion as follows per IRS Pub. 590:

1. The program calculates a tentative taxable social security amount based on the Social Security Benefits worksheet in the IRS instructions without using the IRA deduction.
2. The program uses the tentative taxable social security amount calculated in step 1 to calculate the IRA deduction.
3. After calculating the IRA deduction in step 2, the program recalculates the Social Security Benefits worksheet to determine the taxable social security benefits.

RRB-1099-R Box 6, 10, 11, 12:

Amounts entered in Boxes 6, 10, 11, 12 are not used to determine the taxable amount of the distribution.  These boxes are for Informational Purposes Only.

RRB-1099-R Box 7:

1. Go to Screen 13.1, Pensions, IRA Distributions
2. Enter the RRB-1099-R box 7 in, Gross Distribution

Note- Sum of boxes 4, 5, and 6

RRB-1099-R Box 9:

1. Go to Screen 13.1, Pensions, IRA Distributions
2. Enter RRB-1099-R Box 9 in, Federal Income Tax Withheld