What to Do If I Forget a 1099-R?

You should expect a 1099-R if you take a retirement distribution.

You should expect a 1099-R if you take a retirement distribution.

Form 1099-R reports any distributions you took from a retirement plan such as a 401(k) plan or individual retirement account. Because these distributions are generally taxable, it's important to report them to the Internal Revenue Service when you file your taxes. If you forget to include your 1099-R with your tax return, you may face penalties from the IRS.

Amendment

You can file an amended tax return to report your missing 1099-R to the IRS. Because your 1099-R distribution is reported as income, the instructions for Form 1040X indicate you should complete only lines one through 22 of Form 1040X. Essentially, you must provide the amount of the distribution you omitted, show how it changes your taxable income and report the new amount you owe.

Tax

The IRS doesn't charge you any fees to file Form 1040X, but you most likely will owe more tax if you are including a 1099-R. Except in the case of Roth IRAs, retirement account distributions are almost always taxable. You should submit payment as soon as you file your amended tax return to stop interest from being charged on the amount you owe. Otherwise, interest will accrue daily from the date your return was originally due, which is usually April 15.

Notice

Whether you file an amended return, the IRS is typically aware of your missing 1099-R. The IRS receives its own copy from your financial service provider and will compare that information with what you submitted on your tax return. If there is a discrepancy, you will receive a notice of underreported income, also called a CP-2000 notice. The notice will show the amount of the discrepancy along with the adjusted tax you owe. If you agree with the changes, you can return the response page, pay the appropriate tax and avoid having to file an amended return. If you disagree with the amounts the IRS has computed, you can file an objection. In either case, you must respond to a CP-2000 notice within 30 days.

Consequences

In addition to taxes, you may have to pay a penalty if you neglect to file your 1099-R. If the IRS classifies your omission as a substantial understatement of your income, you could face a 20 percent tax penalty for negligence. If the IRS considers your omission to be fraudulent, you could face a 75 percent penalty. However, most cases of an overlooked 1099-R don't rise to the level of fraud and may not even be negligent. You may escape with just an interest penalty for not paying your taxes when due.

Resources

About the Author

After receiving a Bachelor of Arts in English from UCLA, John Csiszar earned a Certified Financial Planner designation and served 18 years as an investment adviser. Csiszar has served as a technical writer for various financial firms and has extensive experience writing for online publications.

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