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Form 1099-R CPA discusses TIGTA Report Claiming Under Taxation of Retirement Income

Form 1099-A CPA wilmington nc

Gary Bode, CPA: Forms 1099-A and 1099-C have similar functions. For a free phone consult, please call (910) 399-2705.

TIGTA, Treasury Inspector General for Tax Administration, just released a report that would puzzle most CPAs that deal with Form 1099-R. The report states that in 2007, the IRS’ Automated Underreporter Program assessed additional taxes of $607.5 Million on 217,811 tax returns, secondary to problems with Form 1099-R. And the IRS suspects $Billions more under reported taxes exist.

Why would a Form 1099-R CPA find this study odd?

  • It came out in 2012, four tax years later. I think the IRS does a remarkable job, given its mission and resources, but the lag of four entire tax years seems slow.
  • Most problems Form 1099-R CPAs see? Folks paying taxes twice on the same income!

Are you Paying Taxes on the Same Income Twice?

Form 1099-R reports a variety of retirement plan distributions. Some retirement plans, like Roth IRAs for example, are funded by after tax dollars. But since the contributions were made long ago, and probably changed custodians multiple times, the 1099-R is sometimes wrong, or at least ambiguous, e.g. the taxable amount not determined box is checked. I think Form 1099-R CPAs always question how much distribution is taxable.

TIGTA recommended changes to Form 1099-R, and IRS sounds skeptical about them.

It pays to monitor your retirement funds, reconcile them annually and keep all records. Doing so may be the only way to avoid paying taxes twice on the same income. For a free consult with a Form 1099-R CPA, call (910) 399-2705.

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