Recording IRA Distributions on Federal 1040

darasdad
darasdad Member Posts: 2 Newcomer
edited March 31 in Retirement Income

In 2023, at age 62, I cashed in 2 IRAs (total distribution). Both 1099-Rs have code 7 in box 7 and both have an amount listed in box 4 (I had 10% held each time). On my federal 1040 line 4a, I recorded the amounts from the 1099-Rs (line 1) and also carried that same amount to 1040 line 4b.

Instead, are the amounts on the 1099-Rs box 4 used to calculate the amount (a lesser amount) to record on the 1040 line 4b (using Form 8606???)?

Further info...

  • Both distributions were complete liquidations (1099-R total distribution box in 2b is checked)
  • On both 1099-Rs, the amount in box 2a is the same as in box 1
  • I had 10% federal income tax withheld both times (1099-R box 4)

So to further state my question....As an example, let's say 1099-R box 1 and 2a are both $25,000 and box 4 is $2500. Is my taxable amount (1040 line 4b, figured using Form 8606?) not $22,500? Did I not already pay some tax on the distribution as it was withdrawn (the 10% that was withheld)? Did that financial institution not send that 10% to the government as part of my tax burden on that distribution?

Comments

  • JMSSGV
    JMSSGV Member Posts: 208

    You add the amount in Box 4 (Federal income tax withheld) to your total withholding from all Forms 1099 on line 25b. You did not "pay tax" on the amount you withdrew; you had taxes withheld. When you file your tax return, you are calculating your tax liability and determining if you have paid in enough to satisfy that liability. If you paid too much, you get a refund; if you didn't pay enough, you will owe more.

    Having taxes withheld from your IRA distribution is no different from having taxes withheld from your wages - it comes from your taxable income and you don't get to deduct it.

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