Liberty Tax Service Online Basic Income Tax Course. Lesson 9

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Liberty Tax Service Online Basic Income Tax
Course.Lesson 9
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HOMEWORK CHAPTER 8

• HOMEWORK 1 Circle the following items that can
  be deducted on Schedule A.
• Vaccinations Braces
• Maternity clothes Bottled water
• Country club donation Republican party donation
• Splints Cremation
• Vasectomy Slim Fast
• Speeding fine Passport fee
• Diaper service Hearing aid
• Psychiatrist Life insurance premiums
• Athletic club membership Prescription vitamins
• Orthopedic shoes Special mattress needed for back
  injury
• Prenatal car Purely cosmetic surgery
• Acupuncture Chiropractor
• Organ donor expenses Labor union donation
• Colombian relief donation YMCA donation

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HOMEWORK CHAPTER 8

• Homework 1 Answer
• The following items are deductible on Schedule A
• Vaccinations, Splints, Vasectomy, Psychiatrist,
  Orthopedic Shoes, Prenatal Care, Acupuncture,
  Organ Donor Expenses, Braces, Hearing Aid,
  Prescription Vitamins, Special Mattress for back
  injury, Chiropractor, and YMCA Donation.

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HOMEWORK CHAPTER 8

• HOMEWORK 2
• Dominic D. (SSN 074-66-2343, born 11/4/1971) and
  Lucille L. DAndrio (SSN 021-90-8723, born
  10/11/1976) are married and live at 42 County
  Line Rd., Branson, MO 65616. Dominic is a
  computer technician and Lucille is a department
  clerk. They have one child, Bryan (SSN
  432-44-9857, born 4/28/1995). They provide all of
  the support for Bryan. They will file jointly
  and plan to itemize their deductions. Their
  itemized deductions in 2007 were 11,996 and they
  filed a joint return. Their 2007 state income tax
  deduction was 1,798 and the sales tax deduction
  they could have taken was 844. Their W-2 forms
  and other tax information are attached.

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HOMEWORK CHAPTER 8

• Family health insurance 1,800
• Contact lens (Lucille) 220
• Car loan interest 550
• Salvation Army donation (cash) 275
• Tolls for medical visits 48
• Real estate tax 1,800
• Stop-smoking program
• (doctor recommended for Dominic) 320
• Nonprescription drugs 440
• Braces for Bryan (total bill 4,000) 800

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HOMEWORK CHAPTER 8

• Tuition (private school) 3,000
• Gas and oil for medical purposes 110
• Mileage for medical purposes 1,000 miles
• (all from 7/1/08 to 12/31/08
• Prescription drugs 310
• Goodwill clothing donation 330 FMV
• (original cost 3,200)
• Political campaign contribution 50
• Prepare a return for the DAndrios.

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Chapter 9 Retirement Benefits

• Chapter Content
• Types of Retirement Plans
• Pensions, Annuities and Designated Roth Accounts
• Simplified Method
• Lump-Sum Distributions
• Minimum Distributions
• Rollovers
• Early Distributions
• Disability and Retirement
• Commercial Annuities
• IRAs
• Traditional IRAs
• Roth IRAs
• SIMPLE and SEP IRAs
• Retirement Savings Contribution Credit
• Key Ideas

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Chapter 9 Retirement Benefits

• Objectives
• Learn About the Different Types of Retirement
  Plans
• Determine the Taxable and Nontaxable Parts of
  Pensions and Annuities
• Use the Simplified Method
• Learn About Lump-Sum Distributions and Rollovers
• Learn How Disability Affects Your Retirement Plan
• Distinguish Between the Different Types of IRAs
  and Understand Their Benefits
• Learn about the Retirement Savings Contributions
  Credit

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Chapter 9 Retirement Benefits

• The tax law encourages employers to contribute to
  the RETIREMENT PLANS of their employees.
• Employers claim a current deduction for their
  contributions into these retirement funds.
• Employees benefit by having the money added to
  the retirement account tax-deferred.
• Interest, dividends, and appreciation added to
  the value of the account is not taxed you start
  withdrawing the money.

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Retirement Benefits

• Common types of retirement plans include
  pensions, annuities, and IRAs.
• Reporting retirement benefits.
• Most are reported to on Form 1099-R.
• Appendix B defines the boxes used on Form 1099-R
• You report total pension and annuity income on
  line 16a of Form 1040.
• Taxable portion is entered on line 16b of Form
  1040 (if fully taxable report only on line 16b).
• If more than one plan, figure taxable part of
  each separately only enter totals on Form 1040.

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Retirement Benefits

1. Report IRA distributions on lines 15a and 15b of
   Form 1040 (if fully taxable report only on line).
   Among other items, box 7 of Form 1099-R gives the
   distribution code.
2. Report IRA distributions on lines 15a and 15b of
   Form 1040 (if fully taxable report only on line
   15b).
3. Additional tax on IRAs and other retirement plans
   is reported on line 59 of Form 1040.

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Retirement Benefits
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Retirement Benefits

• Form 1040, Page 1

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Retirement Benefits

• Generally, pensions and annuities provide cash
  payments to you after retirement.
• The term of the payments may be for life or for a
  fixed time period.
• A withdrawal (distribution) generally cannot be
  taken before the normal retirement age as
  specified in your plan without a penalty being
  charged.
• Some plans allow for early retirement.

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Retirement Benefits

• A pension provides specific payments to an
  employee or survivor (the beneficiary) after
  retirement from work. The payments are made
  regularly and are for past services with an
  employer.
• An annuity provides payments under a contract
  from an employer or an insurance company, trust
  company, or an individual. Payments are made at
  regular intervals over a period of more than one
  full year.

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Retirement Benefits

• Your cost in a retirement plan is everything that
  you paid into the plan that was not deducted or
  excluded from income. For example, your 401(k)
  contributions which reduced your wages for income
  tax are not considered part of your cost in the
  plan.
• Cost also includes amounts your employer paid
  that were taxable to you when paid.

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EMPLOYEE PENSIONS AND ANNUITIES

• Pension is fully taxable if you did NOT pay any
  part of the cost of your employee pension or
  annuity and or you deferred part of your pay
  while you worked.
• Pension is partially taxable if you did
  contribute to the cost of the plan.
• Generally figure tax-free and taxable parts of
  annuity payments using the Simplified Method. You
  MUST use the Simplified Method if your annuity
  starting date is after November 18, 1996 and
  payments are from a qualified plan.

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THE SIMPLIFIED METHOD

• Using the Simplified Method, you figure the
  tax-free part of each monthly annuity payment by
  dividing your cost by the total number of
  expected monthly payments.
• This is either defined in the contract or figured
  on the annuitants ages on the starting date and
  determined from a table.

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THE SIMPLIFIED METHOD

• Simplified Method must be used if
• Annuity starting date is after November 18, 1996
  and,
• Payments are from qualified employment plan or
  tax-sheltered annuity and,
• At time pension or annuity payments began, you
  were under age 75 or were entitled to fewer than
  5 years of guaranteed payments.

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THE SIMPLIFIED METHOD

• If pension starts after December 31, 1986,
  exclude nontaxable pension amount until pension
  cost is recovered when recovered, entire
  pension income is taxable.
• Use Simplified Method Worksheet to figure
  tax-free portion of payments from qualified
  plan.

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THE SIMPLIFIED METHOD

• For annuity starting dates beginning in 1998, you
  use Table 9-2 of the Simplified Method Worksheet
  to figure the tax-free portion of joint and
  survivor annuity payments from a qualified plan.
• Under this recovery method, the total number of
  monthly annuity payments is based on the combined
  ages of the annuitants at the birthdays preceding
  the annuity starting date.
• If your annuity starting date began before 1998,
  the total number of payments is based on your age
  at that date.

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THE SIMPLIFIED METHOD
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THE SIMPLIFIED METHOD
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THE SIMPLIFIED METHOD

• Civil Service and Railroad Retirement Board use
  forms different from Form 1099-R.

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THE SIMPLIFIED METHOD
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ELECTIVE DEFERRALS TO A QUALIFIED RETIREMENT PLAN

1. You can choose to have part of your compensation
   contributed by your employer to a retirement
   fund.
2. Contribution not included in wages subject to
   income tax.
3. Annual limits apply depending on plan.

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ELECTIVE DEFERRALS TO A QUALIFIED RETIREMENT PLAN

• Elective deferrals include elective contributions
  to retirement plans such as
• Cash or deferred arrangements (section 401(k)
  plans).
• The Thrift Savings Plan for federal employees.
• Salary reduction simplified employee pension
  plans (SARSEP).
• Savings incentive match plans for employees
  (SIMPLE plans).
• Tax-sheltered annuity plans (403(b) plans).
• Section 457 plans.

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ELECTIVE DEFERRALS TO A QUALIFIED RETIREMENT PLAN

• A tax law for years after 2005 allows your 401(k)
  and 403(b) accounts to include a separate
  designated Roth account.
• Designated Roth contributions are treated as
  elective deferrals (subject to the same limits)
  except that the contributions are still included
  in income for the year earned and are considered
  your cost, as discussed earlier.
• A qualified distribution from a Roth account
  (five years after year of contribution) is not
  includable in income, neither the cost nor the
  earnings.

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LUMP-SUM DISTRIBUTIONS

1. Taxable in year received.
2. Reported on Form 1099-R.
3. Some qualify for special tax treatment under Form
   4972.

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LUMP-SUM DISTRIBUTIONS

• Special tax treatments
• Code A in box 7 of Form 1099-R indicates that it
  is a lump-sum distribution and it qualifies for
  special tax treatments such as the 10-year tax
  option.
• Code G indicates a direct tax-free rollover into
  a traditional IRA.

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MINIMUM DISTRIBUTIONS

• If required to receive a minimum distribution,
  must begin by April 1 of calendar year that
  follows calendar year in which you reach age 70
  1/2 or retire.
• If you do not receive the minimum distribution,
  an excise tax may be imposed

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ROLLOVERS

1. Transfer of assets from one qualified retirement
   plan to another.
2. You must complete rollover by 60th day following
   day you receive it.
3. A direct rollover is more advantageous because
   plan administrator will not withhold tax from
   your distribution.
4. If you have the distribution paid to you, plan
   administrator must withhold income tax of 20
   from taxable distribution.
5. You do not pay tax on the amount you rollover.

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EARLY DISTRIBUTIONS

• If receiving distribution prior to reaching age
  59 ½ it is usually subject to additional tax of
  10.
• 1. Applies to taxable part of distribution.

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EARLY DISTRIBUTIONS

• If distribution code 1 is shown in box 7 of Form
  1099-R
• 1. Multiply taxable part by 10
• 2. Enter result on line 60 of Form 1040
• 3. Write no on dotted line if no Form 5329
  is required
• If distribution code 2, 3, or 4 is shown in box 7
  of Form 1099-R, and you qualify for an exception
  to the 10 tax, you do not have to file Form
  5329.
• File Form 5329 if you owe the tax and also owe
  any other additional tax on distribution.

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EARLY DISTRIBUTIONS

• Exceptions in which 10 tax does not apply
  include distributions
• After date on which you reach age 59 1/2
• To beneficiary or to estate on or after death of
  plan participant
• Made because you are totally and permanently
  disabled
• Made as part of series of substantially equal
  periodic payments over life expectancy or joint
  life expectancy of you and beneficiary
• Paid to the extent of deductible medical expenses
  over 7.5 of AGI
• Made to you after you separated from service
  after reaching 55 years of age (employer plans
  only)
• Made from an IRA to pay qualified higher
  education expenses
• Made from an IRA for first-time home buyer

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DISABILITY INCOME

• Taxed as wages until you reach minimum retirement
  age.
• Employer reports it on Form W-2 or Form 1099-R.
• 1. If on Form 1099-R, box 2a shows taxable
  amount.
• 2. Box 7 shows code number 3.
• Report all taxable disability income on line 7 of
  Form 1040 until reaching minimum retirement age.
  After reaching minimum retirement age, report as
  taxable pension .

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• An Individual Retirement Arrangement (IRA) is a
  personal savings plan that offers you tax
  advantages to set aside money for your
  retirement.
• You may be able to deduct your IRA contribution
  in part or fully and amounts in IRA are not taxed
  until distributed, or, in some cases, not taxed
  at all if distributed by the rules.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• Traditional IRAs
• Earnings on contributions not taxed until
  withdrawn.
• In 2006 Rick contributed 2,000 to his
  traditional IRA at his bank. His IRA statement
  showed 45 interest earned in 2008 and added to
  his traditional IRA. He does not pay tax on the
  interest until he withdraws it.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• 2. Reported on Form 1099-R, with distribution
  code shown in box 7, IRA box checked.
• 3. Report IRA distributions on lines 15a and 15b
  of Form 1040 (fully taxable only on line 15b).
• 4. Deductions are reported on line 32 of Form
  1040.
• 5. Can deduct contributions on 2008 return if
  made April 15, 2009.
• 6. To contribute to traditional IRA, you must be
  under age 70 1/2 and have taxable compensation.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• 7. Contributions to traditional IRA cannot
  exceed the smaller of your total taxable
  compensation or 5,000 (6,000 if 50 or older) in
  2008.
• 8. If you have earned income, you may establish
  traditional IRA for spouse but must file MFJ.
• When two separate IRAs, no more than 5,000
  (6,000 if 50 or older) contributed to either
  one.
• a. Total combined contribution to both IRAs
  cannot exceed smaller of your and your spouses
  total taxable compensation or 10,000 (11,000
  if one 50 or older, 12,000 if both 50 or older)
• b. Contribute to spousal IRA until reaching age
• 70 1/2

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)
Problem 1

• David and Robyn are filing a joint return. David
  is 52 and Robyn is 48. David earned 56,000
  during the year. Robyn does not work outside the
  home. David can contribute 6,000 to a
  traditional IRA for himself. How much can he
  contribute to an IRA for Robyn?
• a. 6,000
• b. 5,000
• c. 4,000

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)
Problem 1

• David and Robyn are filing a joint return. David
  is 52 and Robyn is 48. David earned 56,000
  during the year. Robyn does not work outside the
  home. David can contribute 6,000 to a
  traditional IRA for himself. How much can he
  contribute to an IRA for Robyn?
• b. 5,000

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)
Problem 2

• Richard is 73 and earned 12,000 during the year.
  His wife, Geraldine, is 68. Can Richard make an
  IRA contribution for himself?
• Yes or No?

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)
Problem 2

• Richard is 73 and earned 12,000 during the year.
  His wife, Geraldine, is 68. Can Richard make an
  IRA contribution for himself?
• No
• Because he is over age 70 ½.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)
Problem 3

• Richard is 73 and earned 12,000 during the year.
  His wife, Geraldine, is 68. Richard cannot make
  an IRA contribution for himself because he is
  over age 70 ½ but he can make an IRA contribution
  for his wife. How much of a contribution can be
  made for Geraldine?
• a. 5,000
• b. 6,000
• c. 9,000

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)
Problem 3

• Richard is 73 and earned 12,000 during the year.
  His wife, Geraldine, is 68. Richard cannot make
  an IRA contribution for himself because he is
  over age 70 ½ but he can make an IRA contribution
  for his wife. How much of a contribution can be
  made for Geraldine?
• b. 6,000

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• If you are covered by a pension plan at work,
  your traditional IRA contributions may or may not
  be deductible depending on filing status and AGI.
  See Table 9-3.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• If you are not covered by a retirement plan at
  work, your deductible traditional IRA
  contributions may still be limited if your spouse
  is covered by a retirement plan. See Table 9-4.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• Deductibility of IRA contributions is covered in
  Chapter 16.
• Excess contributions, early withdrawals, and
  excess accumulations may be subject to additional
  taxes and penalties (see Chapter 17).
• Distributions must begin by April 1 of year
  following calendar year in which you reach age 70
  1/2.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• Roth IRAs
• A Roth IRA is an individual retirement plan that
  generally is subject to the rules that apply to a
  traditional IRA.
• 1. Distributions reported on Form 1099-R with
  J, Q or T in box 7.
• 2. Differences between Roth IRA and traditional
  IRA are
• a. Can contribute to Roth IRA regardless of age
  .
• b. Can leave amounts in Roth IRA as long as you
  live.
• c. Cannot deduct contributions to Roth IRA.
• 3. Qualified distributions are tax-free if meet
  requirements.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• 4. Use Table 9-5 to determine if you can
  contribute to a Roth IRA.
• 5. If contributing only to Roth IRA, maximum
  limit is lesser of 5,000 (6,000 if age 50 or
  over) or taxable compensation.
• 6. Use Table 9-5 and Publication 590 to determine
  if contribution limit is reduced.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)
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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• 7. If contributing to both Roth IRA and
  traditional IRA, your contribution limit for Roth
  IRAs must be reduced by all contributions for
  year to all IRAs other than Roth IRAs.
• 8. If exceed allowable limit of contributions
  to Roth IRA, subject to 6 excise tax.
• 9. Can convert traditional IRA to Roth IRA
  will be taxed as if distributed and not subject
  to 10 additional tax (typically code 2 is shown
  in box 2 of Form 1099-R).

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• 10. Can convert traditional IRA to Roth IRA when
  both of following are met
• a. Modified AGI is not more than 100,000
• b. You do not file MFS

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• Qualified distributions from a Roth IRA are not
  taxable and, therefore, you will not include them
  in the gross income on your return.
• A qualified distribution is any payment or
  distribution that meets the following
  requirements
• It is made after the 5-year period beginning with
  the first taxable year for which a contribution
  was made to a Roth IRA set up for your benefit,
  and
• The payment or distribution is made
• - On or after the date you reach age 59 ½,
• - Because you are disabled,
• - To a beneficiary or to your estate after your
  death, or
• - To pay up to 10,000 of certain qualified
  first- time homebuyer amounts.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• A distribution is not a qualified one if you
  receive it within the 5-taxable-year period or
  you withdraw excess contributions or earnings on
  it before the due date of your return.
• A 10 additional tax is imposed on premature
  taxable distributions.
• Each conversion will have a separate
  5-taxable-year period before it is qualified.
• It is important to remember that, with Roth IRAs,
  you can always have your original contributions
  distributed tax-free even if the distribution is
  not qualified.

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INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAs)

• Example
• Fred contributed 3,000 to his Roth IRA in both
  2006 and 2007. In 2008, he took a distribution of
  6,200. The amount taxable (and potentially
  subject to the 10 additional tax) is 200
  (6,200 - 6,000). Had he withdrawn only 6,000,
  then none of the distribution would have been
  taxable nor subject to the 10 additional tax.

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RETIREMENT SAVINGS CONTRIBUTION CREDIT

1. Tax credit of up to 1,000 (2,000 if married
   filing jointly).
2. For making contributions to an employer-sponsored
   plan or an IRA.
3. Cannot claim if AGI more than 26,500 (39,750 if
   H of H, 53,000 if MFJ).
4. Cannot claim if under age 18 at the end of 2008,
   dependent on another return or full-time student.
5. Complete Form 8880 and enter credit on Form 1040,
   line 51.

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Retirement Benefits

• KEY IDEAS
• Pensions or annuities may have a tax-free portion
  if you make after-tax contributions to the plan.
• To determine the taxable portion of the annuity
  payments, use the Simplified Method if your
  annuity starting date is after November 18, 1996
  and your annuity payments are from a qualified
  plan. For annuity starting dates beginning in
  1998, there are special table amounts for joint
  and survivor annuities.
• Taxable pension or annuity income is entered on
  line 16b of Form 1040.

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Retirement Benefits

• Key Ideas
• Federal income tax on pension or annuity income
  can be withheld, or you may choose to pay
  estimated tax.
• If you are age 70 ½ years or older by the end of
  the tax year, you cannot make traditional IRA
  contributions for that year
• Traditional IRA contributions generally cannot be
  more than your taxable compensation or 5,000
  (6,000 if age 50 or older), whichever amount is
  smaller.
• Elective deferrals to a qualified employer
  retirement plan are not included in wages subject
  to income tax.

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Retirement Benefits

• Key Ideas
• If you have earned income, you can contribute to
  a traditional IRA for a spouse who has little or
  no earned income, but the total amount
  contributed to both traditional IRAs cannot
  exceed your taxable compensation or 10,000
  (11,000 if one of you is age 50 or older,
  12,000 if both of you are age 50 or older)
  whichever amount is smaller.
• You may be subject to additional tax for
  contributing more to a traditional IRA than
  allowed, making traditional IRA withdrawals
  before age 59 ½, or for not withdrawing enough
  traditional IRA funds after age 70 ½.
• Taxable IRA distributions are entered on line 15b
  of Form 1040.

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Retirement Benefits

• CLASSWORK 1 True or False.
• The taxable portion of pension income is entered
  on line 15b of Form 1040.
• (2) You report IRA distributions on line 32 of
  Form 1040.
• (3) A pension is fully taxable if you did not
  contribute to the plan.
• (4) If you retire on disability and have reached
  the minimum retirement age, you report your
  pension distributions on line 16b of Form 1040 if
  they are fully taxable.
• (5) You cannot contribute to a Roth IRA if you
  are over age 70 ½.

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Retirement Benefits

• CLASSWORK 1 True or False.
• (6) An early distribution is generally one taken
  prior to reaching age 59 ½.
• (7) The Simplified Method is used to figure the
  tax-free portion of each monthly annuity payment
  by dividing the cost by the total number of
  expected monthly payments.
• (8) The maximum retirement savings contribution
  credit that can be claimed for a single taxpayer
  is 1,000.
• (9) Qualified distributions from a Roth IRA are
  not taxable.
• (10) You must begin taking minimum distributions
  from a Roth IRA when you turn age 59 ½ .

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Retirement Benefits

• CLASSWORK 1 True or False.
• (11) A lump-sum distribution is a payment you
  are required to receive after you reach age 70 ½.
  
• (12) To avoid a required 20 federal
  withholding, you must make a rollover of a
  retirement plan within 60 days after you receive
  the distribution.
• (13) Contributions you make to a traditional IRA
  are always deductible.
• (14) A contribution to an IRA for a taxpayer age
  43 cannot exceed 5,000.
• (15) Taxable compensation for a traditional IRA
  includes alimony payments received.

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Retirement Benefits

• CLASSWORK 1 True or False.
• The taxable portion of pension income is entered
  on line 15b of Form 1040. F
• (2) You report IRA distributions on line 32 of
  Form 1040. F
• (3) A pension is fully taxable if you did not
  contribute to the plan. T
• (4) If you retire on disability and have reached
  the minimum retirement age, you report your
  pension distributions on line 16b of Form 1040 if
  they are fully taxable. T
• (5) You cannot contribute to a Roth IRA if you
  are over age 70 ½. F

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Retirement Benefits

• CLASSWORK 1 True or False.
• (6) An early distribution is generally one taken
  prior to reaching age 59 ½. T
• (7) The Simplified Method is used to figure the
  tax-free portion of each monthly annuity payment
  by dividing the cost by the total number of
  expected monthly payments. T
• (8) The maximum retirement savings contribution
  credit that can be claimed for a single taxpayer
  is 1,000. T
• (9) Qualified distributions from a Roth IRA are
  not taxable. T
• (10) You must begin taking minimum distributions
  from a Roth IRA when you turn age 59 ½ . F

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Retirement Benefits

• CLASSWORK 1 True or False.
• (11) A lump-sum distribution is a payment you
  are required to receive after you reach age 70 ½.
  F
• (12) To avoid a required 20 federal
  withholding, you must make a rollover of a
  retirement plan within 60 days after you receive
  the distribution. F
• (13) Contributions you make to a traditional IRA
  are always deductible. F
• (14) A contribution to an IRA for a taxpayer age
  43 cannot exceed 5,000. T
• (15) Taxable compensation for a traditional IRA
  includes alimony payments received. T

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Retirement Benefits

• CLASSWORK 2 In which box of Form 1099-R would
  you find the following? Also give the code number
  or letter, if applicable.
• federal income tax withheld
• taxable amount of the distribution
• early distribution to which a 10 penalty tax
  applies
• direct rollover to traditional IRA

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Retirement Benefits

• CLASSWORK 2 In which box of Form 1099-R would
  you find the following? Also give the code number
  or letter, if applicable.
• 5. distribution from Roth IRA in first 5 years
• 6. disability distribution
• 7. amount of your contributions to the retirement
  plan
• 8. total amount of distribution
• NOTE For questions 2, 3, 4, 5, and 6, the amount
  would appear in box 1.

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Retirement Benefits

• CLASSWORK 2 In which box of Form 1099-R would
  you find the following? Also give the code number
  or letter, if applicable.
• federal income tax withheld Box 4
• taxable amount of the distribution Box 2a
• early distribution to which a 10 penalty tax
  applies Box 7, Code 1
• direct rollover to traditional IRA Box 7, Code
  G

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Retirement Benefits

• CLASSWORK 2 In which box of Form 1099-R would
  you find the following? Also give the code number
  or letter, if applicable.
• 5. distribution from Roth IRA in first 5 years
  Box 7, Code J
• 6. disability distribution Box 7, Code 3
• 7. amount of your contributions to the retirement
  plan Box 5
• 8. total amount of distribution Box 1
• NOTE For questions 2, 3, 4, 5, and 6, the amount
  would appear in box 1.

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• Questions Answers