Diane Posted February 12, 2011 Report Share Posted February 12, 2011 Client transferred funds (and closed out) a small annuity. The 1099 showed a taxable amount around $1,825 more than what was transferred to the new investment account. When asked about the difference they explained that $1,825 was a 'Withdrawing Charge'. I'm tempted to consider this charge as part of the 'cost' of the annuity and don't really want the client to have to pay tax on the full 1099 amount. The client does not itemize -- is there any other way to handle this? Can it be entered on Line 21 as a negative with an explanation as 'Additional Cost'? Diane Quote Link to comment Share on other sites More sharing options...
Kea Posted February 12, 2011 Report Share Posted February 12, 2011 Was the $1825 a "surrender charge"? If so, I think in would still be taxable. Quote Link to comment Share on other sites More sharing options...
Diane Posted February 12, 2011 Author Report Share Posted February 12, 2011 The term they used was 'Withdrawal Charge'. Diane Quote Link to comment Share on other sites More sharing options...
Randall Posted February 12, 2011 Report Share Posted February 12, 2011 Does the 1099-R show gross and taxable amounts the same? Is the box checked for Taxable amount not determined? I would tend to think this is part of his cost too but not show on line 21, rather input the lower taxable amount on the 1099R input sheet. Quote Link to comment Share on other sites More sharing options...
Diane Posted February 12, 2011 Author Report Share Posted February 12, 2011 The 1099 does not show Taxable Amount with the 'Taxable Amount Not Determined' box checked. Box 5 does show client's contributions/payments. So, I'm thinking I can subtract the Withdrawal Charge and the client's cost from the Gross Distribution amount to arrive at the Taxable Amount. Diane Quote Link to comment Share on other sites More sharing options...
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