Form 1099R – Retirement Income

The Internal Revenue Service requires retirement companies to report withdrawals made from a retirement account with Form 1099-R. The retired individuals will then report their retirement income on their tax returns using Form 1099-R.

You can think of Form 1099-R as the W-2, Wage and Tax Statement but instead of it coming from your employer, it is issued to you by the retirement company you made withdrawals. On Form 1099-R, you will see the amount you withdrew from your retirement account along with the taxable amount of your withdrawal and the taxes withheld.

Form 1099-R also shows the state and local income tax withheld from your retirement income. This is only for those who have a traditional retirement account such as a traditional IRA or a traditional 401(k). Those who have a Roth IRA or Roth 401(k), won’t pay taxes on the money withdrew since taxes are already have been paid.

However, regardless of the type of retirement account the withdrawal is made from, the retirement companies are required to report it to the IRS. With that said, you will receive Form 1099-R but it will only show the amount you withdrew.

Report Income on Form 1099-R to Tax Return

Just like any other tax form that reports income you earned during the course of the tax year, you will attach Form 1099-R to your tax return. If the retirement income is your only source of income, enter the amounts seen on Form 1099-R to your tax return.

If you have income outside of retirement, add the amounts found on the corresponding tax forms and determine your adjusted gross income. If you’re going to file taxes by mail, you must staple the supporting tax documents and the ones that report income in front of Form 1040. Those who file electronically can simply import their tax documents to their tax returns. How this is done depends on the tax software used to file a tax return.

The bottom line is if you’re retired and made withdrawals from your retirement account, you will receive a Form 1099-R from the retirement company. If your retirement income is subject to tax, you must report this income on Form 1040.

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