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Quick Guide to Tax Reporting for Retirement Distributions - 1099R (Updated for 2018 tax forms)

Date: February 20, 2019
New to retirement distributions? Welcome to learning about 1099-R forms.

Question: I received a 1099-R from FCMM for my retirement distribution(s) for the last year. Where do I enter this information on my tax return?

After the close of a tax year, your retirement plan sends one, or more, Form 1099-R to each distribution recipient and to the IRS, reflecting any activity of income or rollover distribution from your account. Box 7 will contain a code classifying the type of distribution. (Examples include: 7 for normal distribution; B for Roth distribution; G for rollover to another account.)

Form 1099-R Box 1 lists the gross (total) distribution. Box 2a lists any portion of your distribution that has been determined to be taxable.

If your distribution was designated by FCMM as housing allowance eligible, Box 2a will be blank and Box 2b will be checked to indicate “Taxable amount not determined”. (Contributions made while a minister or missionary was eligible for a housing allowance are eligible for the housing allowance exclusion when distributed. FCMM designates 100% of such distributions as housing allowance.)

The reason the taxable amount has not been “determined” is that you must maintain records to be able to document your eligible housing allowance expenses (not exceeding the IRS guideline of the lesser amount of: housing allowance designated, actual housing expense, or fair rental value) and to report any unused amount as taxable income. If you used the full amount of your housing allowance designation, there is no additional income to report.

The amount in Form 1099-R Box 1 is reported on your tax return Form 1040 in Line 4a “IRAs, pensions, and annuities” and the amount in Box 2a is entered in 1040 Line 4b.

If you did not use the full amount of your designated housing allowance, report the unused amount in 1040 Line 4b so that it will be added to your taxable income. If you used the entire distribution as housing allowance, enter 0 in 1040 Line 4b.

Typically, you do not enter income from retirement distributions on Form SE Self-Employment Tax since retirement income is not subject to self-employment tax. However, if you are not retired and are receiving a distribution from FCMM, your distribution may be subject to SE tax.

If you are using tax return software (examples: TurboTax, TaxAct, H&R Block), be sure to review the entries made to ensure the reporting is done correctly, adding optional supporting details or adjusting entries if necessary to accomplish accurate tax filing.

Note: The information in this article is provided as an educational resource and is based on current regulations as our advisers understand them. FCMM does not practice, and cannot provide, tax or tax-filing counsel. Please consult a qualified tax preparer if you need assistance. For a minister or missionary, you should be sure your tax preparer understands clergy tax matters.