Discussion:Can a CSA 1099-r be used for EIC
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Discussion Forum Index --> Tax Questions --> Can a CSA 1099-r be used for EIC
| 6 March 2007 | |
| My person received a CSA 1099-R she wants to claim EIC. She is 57 Code 3, she was told that minimum retirement age is 55 years old w/30 years or 60 years old with 20years service. When she called IRS she says they told her to just move the 1099-r to line 7... this can't be right... any help would be great | |
| 6 March 2007 | |
| I believe that the Service had issued an FSA about this. The advice that you received over the phone appears to be correct. In addition, this is consistent with the instructions to line 7 and the earned income worksheets in the 1040 instructions. | |
| March 6, 2007 | |
| In the 1099-R worksheet in your software, look for where you check the box that the recipient is under the required minimum retirement age, when the code is 3 for disability. In ProSeries Pro, this is under E, Disablity Payments. The distribution will be entered on line 7 by the software. | |
TaxesAreFun (talk|edits) said: | 18 March 2007 |
| First, I want to make it clear that I am not a tax professional. Despite my lack of credentials, I believe I have some useful information to contribute because this issue came up in our personal situation a few years back, so I have researched this topic in depth.
If I read the original question correctly, the person who received the CSA 1099-R is 57 years old. Code 3 indicates that they retired on disability. They stated that "minimum retirement age" (which is the age at which he/she could have received an annuity if they were not disabled) is 55 years old with 30 years or 60 years old with 20 years. So which category does the retiree fall into? Did he/she have 30 years' service? You didn't state specifically whether the retiree has actually reached their minimum retirement age. (They very well could have started receiving disability retirement before age 55; if they were eligible for regular retirement at age 55 (30 years service), then at age 57, they would now be past minimum retirement age.) The answer to this question will determine whether ANY of the annuity should be reported on line 7 (wages, salaries, tips, etc.)!!! Disability annuity payments received BEFORE minimum retirement age are reported on Form 1040 or Form 1040A, line 7. The amount on that line can be used to qualify for EIC. But any amount received AFTER minimum retirement age is reported on the Pensions and Annuity line of the federal tax form, and is not considered eligible income for EIC. So, if the disability retiree could have retired at age 55 (with 30 years of service), he/she CANNOT use the annuity income for EIC since they are now past minimum retirement age (and therefore the income cannot be reported on line 7). If the retiree's minimum retirement age is age 60 (with 20 years of service), then he/she can still report that income on line 7 and use it to determine qualification for the EIC. Since they retired from the federal government, please see Publication 721 (Tax Guide to U.S. Civil Service Retirement Benefits). Also review the instructions for Line 7. Publication 721 also explains how to calculate any tax-free portion of the annuity after reaching minimum retirement age. I hope this is helpful. P.S. Some may wonder if disability retirement income reported on line 7 (received before minimum retirement age) can be used to qualify for an IRA contribution, since it can be used for EIC purposes. The answer is NO, according to a letter I received from the IRS when I asked the question about four years ago. | |
