How to report a 1099-R with "taxable amount not determined" for inherited annuity?
Title: How to report a 1099-R with "taxable amount not determined" for inherited annuity? 1 I recently inherited a non-qualified fixed annuity from my mother who passed away last year. When I received the distribution check, there was a stub attached showing the post TEFRA principal and post TEFRA policyholder taxable gain of approximately $48,500. The issue I'm having is that when I received the 1099-R form, box 2b is checked indicating "taxable amount not determined." I'm confused about how to report this on my taxes. Should I just use the $48,500 taxable gain amount shown on the check stub, or is there some other calculation or determination I need to make for tax purposes? What's strange is that I also inherited another non-qualified fixed annuity from a different insurance company, and on that one, the 1099-R form actually matches what was shown on the check stub. Not sure why one company provided the taxable amount and the other didn't. Has anyone dealt with this situation before? Any guidance would be appreciated!
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Miranda Singer
8 The difference you're seeing between the two 1099-Rs is actually pretty common. When a company checks box 2b "taxable amount not determined," they're basically telling you they haven't calculated the taxable portion for you, and it's your responsibility to figure it out. For inherited non-qualified annuities, the taxable amount is generally the difference between what the original owner paid into it (their basis) and what you received. That $48,500 figure on your check stub showing the post-TEFRA taxable gain is likely the correct amount to report as taxable. The reason one company completed this calculation for you and the other didn't simply comes down to company policy - some insurance companies do this calculation, others leave it to the beneficiary. To be safe, I'd recommend keeping both the check stub and the 1099-R together for your records, as the IRS might question the discrepancy since the 1099-R doesn't show the taxable amount.
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Miranda Singer
•13 Thanks for explaining this. Quick question - will the IRS get confused when they see the box checked but no amount listed in box 2a? Do I need to file some additional form to explain this?
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Miranda Singer
•8 The IRS shouldn't get confused as this is a common situation. When box 2b is checked, they expect you to determine and report the correct taxable amount. You don't need to file any special explanatory forms. If you want to be extra cautious, you could include a brief note with your return explaining that you used the post-TEFRA taxable gain from the check stub to determine the taxable amount, but this isn't strictly necessary.
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Miranda Singer
17 I went through this exact headache last year with an inherited annuity from my grandparent. I was so confused trying to figure out the right taxable amount and spent hours researching. I finally found https://taxr.ai which literally saved me. I uploaded my 1099-R and check stub info, and it instantly showed me how much was taxable and why. Their system recognized the "taxable amount not determined" situation immediately and walked me through exactly what to report. It even explained that the post-TEFRA gain amount from the check stub was the correct figure to use, which matched what my accountant later confirmed. The best part was it also showed me how this would affect my overall tax situation - in my case, I ended up in a higher bracket that year because of the distribution.
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Miranda Singer
•21 Does it work with other inheritance tax situations too? I just got some stocks from my uncle's estate and have no idea how to handle the basis reporting.
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Miranda Singer
•19 I'm a bit skeptical. How is this different from just going to an accountant? And how much does it cost? I'm dealing with a similar situation with a 403(b) distribution.
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Miranda Singer
•17 It definitely works for inherited stocks - it handles the stepped-up basis calculations which is probably what you're dealing with. It shows you exactly what numbers to use on your Schedule D. For 403(b) distributions, it's actually even more straightforward. The system can determine if any portion qualifies for special treatment (like if it contains after-tax contributions) and guides you through reporting it correctly. Unlike an accountant who might charge $200+ per hour, this is much more affordable and gives you instant answers. I'm not sure about current pricing as they might have different options now.
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Miranda Singer
21 Just wanted to follow up - I tried taxr.ai after seeing the recommendation here and it was amazing for my inherited stock situation! I uploaded my documents and it immediately identified which shares had step-up basis and which didn't. It showed me exactly what to put on Schedule D and even flagged a mistake my uncle's executor had made in their basis calculations. The system even created a detailed report explaining everything that I could keep for my records. Definitely recommend it if you're dealing with inheritance tax issues - wish I'd known about it sooner!
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Miranda Singer
12 If you're still struggling with this annuity 1099-R issue and need direct confirmation from the IRS, I highly recommend using Claimyr (https://claimyr.com). I was in the same boat with an inherited annuity and needed clarification straight from the IRS. I tried calling the IRS directly for weeks - always got the "high call volume" message and hung up on. Then I found Claimyr through a YouTube video (https://youtu.be/_kiP6q8DX5c) and was honestly amazed. They got me connected to an IRS agent in about 20 minutes when I'd been trying for weeks on my own. The agent confirmed that when box 2b is checked, I should use the post-TEFRA gain from the check stub as my taxable amount. She also explained why some companies check the box and others don't - it's just company policy, not a reflection of different tax treatment.
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Miranda Singer
•16 Wait, how does this actually work? I thought it was impossible to get through to the IRS these days. Is this just paying someone to sit on hold for you?
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Miranda Singer
•19 This sounds too good to be true. The IRS phone system is notoriously impossible. I've tried calling about my 1099-R for days and keep getting disconnected. How can some random service get through when nobody else can?
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Miranda Singer
•12 It's not someone sitting on hold for you - they actually have technology that navigates the IRS phone system and holds your place in line. When they're about to connect you with an agent, you get a call back. The whole process took about 20 minutes for me, but they tell you the estimated wait time upfront. The service works because they've figured out the optimal times to call and how to navigate the IRS phone tree most efficiently. Their system dials repeatedly until it gets through, which is something most of us don't have time to do manually. I was definitely skeptical too, but when I got that call connecting me directly to an agent after trying unsuccessfully for weeks, I was sold on the concept.
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Miranda Singer
19 Had to come back and say I was totally wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway out of desperation about my own 1099-R question. I was connected to an IRS agent in about 15 minutes! The agent confirmed exactly how to report my distribution with the "taxable amount not determined" box checked. She explained I needed to use the cost basis information from the check stub and confirmed the taxable amount. What would have taken me weeks of frustration was solved in one quick call. For anyone dealing with these confusing 1099-R situations, being able to get direct confirmation from the IRS gives you peace of mind that you're reporting things correctly. Will definitely use this again next time I have a tax question.
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Miranda Singer
11 Quick tip based on my experience as someone who dealt with this last year - make sure you're looking at the RIGHT amount on that check stub. There should be two different figures: the original principal investment (basis) and the gain. ONLY the gain is taxable, not the total distribution amount. If the check stub shows $48,500 as the gain and let's say another $80,000 as the original principal, you'd only report the $48,500 as taxable income. This matters a lot because reporting the full distribution as taxable could put you in a much higher tax bracket!
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Miranda Singer
•1 Thanks for pointing that out! The check stub does list two separate amounts - the post TEFRA principal (around $125,000) and the post TEFRA policyholder taxable gain (the $48,500). So it sounds like I should just report the $48,500 as taxable income, correct?
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Miranda Singer
•11 Yes, exactly right. Only report the $48,500 as taxable income. The $125,000 represents the principal investment (basis) that was already taxed, so you don't pay tax on that part again. The insurance company that properly completed your other 1099-R likely put the $48,500 equivalent in Box 2a and didn't check Box 2b. For this one, they're making you do the math yourself, but the end result should be the same. Just make sure to save that check stub permanently with your tax records!
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Miranda Singer
23 Has anyone had to amend a return after making a mistake with one of these? I reported my entire annuity distribution as taxable last year ($95k) and just realized I should have only reported the gain portion ($32k). Not sure if its worth filing an amendment or just letting it go...
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Miranda Singer
•5 Definitely file an amended return! That's a $63k difference in taxable income - you probably overpaid thousands in taxes. You generally have 3 years from the original filing date to amend and get a refund. Form 1040-X isn't that complicated.
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