Husband dies, was receiving income from 1099R while disabled, thus income flows to line 7 of 1040. Does wife who inherits the 1099R continue with the disability exception that husband had? Or uses he code 4 as in the form.
tks all
bw
The payments ceased being a disability pension upon his death. The payments are reported as pension income, not wages. Use code 4 in Box 7 of your software's 1099-R.
tks, sorta felt like that was gonna be the ans!
The payments ceased being a disability pension upon his death. The payments are reported as pension income, not wages. Use code 4 in Box 7 of your software's 1099-R. ==== Agreed, but note however that both codes 2 and 4 mean that the payout is exempt from the 10% excise tax on early distributions. 4 is a better choice because that also indicates the possibility of an estate tax deduction for income with respect to a decedent where code 2 does not.
Non-qualified disability pensions that flow to line 7 should be reported on a form W-2 with no FICA taxes, not 1099-R. So if this was reported on a
1099-R, why wasn't it put on line 16?
The IRS instructions for line 7 say to put disability pensions that are on a 1099-R on line 7, not line 16, if the recipient is below the minimum retirement age for the plan. More employers do this wrong than do it right. Reporting a disability pension on a 1099-R instead of a W-2 is so common that the IRS instructions cover the situation. And most tax software has a simple special provision, such as a checkbox, to make it go to line 7 if the recipient is below the minimum retirement age for the plan, as specified in the IRS instructions.
Bob Sandler
I believe the reasons you see these payments on a 1099-R are that: There are no instructions for the W-2 that include disability pension income as Box 1 wages. There are only instructions for sick pay which is short-term disability. When there is sick pay, the employee is still on the payroll. When there is a disability pension, the employee has been terminated and the payment instructions go to the pension plan administrator.
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