Do these distribution codes from 1099-R with code W require tax reporting?

You're interpreting the instructions correctly. When you see a code W in box 7 of your 1099-R, this specifically indicates a payment made from your annuity contract to purchase qualified long-term care insurance. According to IRS guidance, you don't need to report this amount on your tax return. This is different from other distribution codes that might require reporting even if they're not taxable. In your specific case with code W, the $3,850 doesn't need to be reported anywhere on your tax return. The IRS already knows about this transaction through the 1099-R reporting system, but it's essentially a non-taxable event for you.

After struggling with a similar situation last year, I found an amazing tool called taxr.ai (https://taxr.ai) that helped me understand all these distribution codes. I was confused about my 1099-R with code W just like you, and wasn't sure if I needed to report it. Traditional tax software wasn't clear on this specific situation. I uploaded my 1099-R to taxr.ai and it immediately identified the code W scenario and explained exactly what it meant for my tax situation. It even showed me where in the IRS guidelines this was covered and assured me I didn't need to report it anywhere.

I was really skeptical about using external tools but finally tried taxr.ai after getting frustrated with conflicting advice online. Surprisingly helpful! I had a 1099-R with code W plus several other tax forms with different situations. The website analyzed everything and explained each code's impact on my taxes. For the code W specifically, it clearly showed why it wasn't reportable and saved me from incorrectly including it on my return. Would have potentially caused issues since I was reporting other 1099-Rs that WERE taxable. Made the whole process way clearer than hours of googling.

If you're still confused about your 1099-R or have other tax questions, getting through to the IRS directly can actually solve this quickly. I spent WEEKS trying to get someone on the phone last year until I found Claimyr (https://claimyr.com). They have this system that navigates the IRS phone tree for you and calls you back once they've secured a place in line with an actual agent - you can see how it works here: https://youtu.be/_kiP6q8DX5c My question about distribution codes was answered in minutes once I actually spoke to someone. The IRS agent confirmed exactly what to do with my code W distribution and cleared up some other questions I had about my retirement accounts too.

I need to admit I was completely wrong about Claimyr. After dismissing it as a scam, I was still struggling with my tax questions including that code W distribution issue, so I reluctantly gave it a try. It actually worked exactly as described. Their system handled the wait time with the IRS, and I got a call back when an agent was available. The IRS representative confirmed that code W distributions don't need to be reported anywhere on my tax return. Saved me hours of frustration and the agent also helped clarify some other questions I had about my retirement accounts. Definitely worth it during tax season when getting through is nearly impossible.

I work with retirement accounts and can confirm what others have said. Code W is specifically for qualified long-term care insurance premiums paid directly from an annuity or life insurance policy. The IRS created this special code because these transactions are non-reportable. The insurance company is required to send the 1099-R, but you (the taxpayer) don't need to do anything with it. One tip though - keep the form with your tax records even though you don't report it. If you're ever audited, you'll want documentation explaining why you received a 1099-R that doesn't appear on your tax return.

Has anybody used TurboTax with these 1099-R code W forms? Mine keeps asking me to enter all 1099-Rs and I'm not sure if I should skip this one or enter it somewhere.

I had a similar situation last year with a 1099-R code W from my annuity for long-term care insurance premiums. Just to add some reassurance - you're absolutely right that you don't need to report this on your tax return. The IRS specifically excludes these transactions from reporting requirements. One thing I learned is that even though you don't report it, some tax software will still ask you to enter the form for record-keeping purposes. If your tax software is prompting you to input all 1099-Rs, you can either enter it and let the software recognize the code W as non-reportable, or simply skip it entirely since it won't affect your tax liability either way. The key thing is understanding that this is completely different from other retirement distributions that might be taxable or reportable. Your $3,850 distribution for qualified long-term care insurance is essentially invisible to your tax return, which is exactly how it should be.

Just wanted to share my experience as someone who went through this exact same confusion last year. I received a 1099-R with code W for about $2,400 that went toward long-term care insurance premiums from my annuity, and I spent way too much time worrying about it. The bottom line is you're interpreting the IRS instructions perfectly - code W distributions are completely non-reportable. I ended up calling the IRS directly (after a long wait) and the agent confirmed that these amounts should not appear anywhere on your tax return. What really helped me was understanding that this isn't like other retirement distributions where you might report the amount but not pay tax on it. With code W, it's as if the transaction doesn't exist for tax purposes. The insurance company still has to send you the 1099-R for their reporting requirements, but from your perspective as the taxpayer, there's nothing to do. Keep the form with your tax records just in case, but don't stress about including it in your return. Your $3,850 stays completely out of your tax calculations.

I went through this exact situation two years ago and can confirm what everyone else is saying - you're absolutely correct in your interpretation. Code W distributions for qualified long-term care insurance premiums are completely non-reportable on your tax return. What helped me understand this better is realizing that the IRS created this special code specifically because Congress wanted to encourage people to purchase long-term care insurance. By making these premium payments from annuities tax-neutral, they removed a potential barrier to getting this important coverage. Your $3,850 distribution is essentially treated as if it never happened for tax purposes. The annuity company reduces your account balance, the insurance company gets the premium payment, and you get the long-term care coverage - but none of this creates any taxable event for you. One practical tip: if you're using tax software that insists on you entering all 1099-Rs, go ahead and enter it. Most modern tax software will recognize the code W and automatically exclude it from your taxable income calculations. This also creates a paper trail showing you received and properly handled the form, which could be helpful if there are ever any questions down the road.