1099 code 3 in box 7?

Question

Would a 1099R income of $14,085 with a code 3 in box 7 be taxable if the other source of income is from Social Security (in the amount of $19,458.) Filing Status is Single. No other income.

Answer 1

Code 3 is a disablity distribution from a retirement plan, Yes it is taxable
In addition some of your social security may be taxable based on total income on the return plus 50% of the SS


If you are a Single filer or Married Filing Separately and you did not live with your spouse, if one half of your Social Security plus all other income that appears on you return exceed 25,000.00 then a portion of your Social security will be tax able.
The 1099R would be reported on line 12a and 12b of the 1040A
and line 16a and 16b on the 1040


If you are Married Filing Jiontly, if one half of your Social Securtiy plus all other income that appears on your return exceeds 32,000.00, then a portion of your Social Security will be taxable

If you were Married Filing Separately and lived with your spouse even one day of the Tax year, You will have a taxable portion of your Social Security.

In all scenerio's the maximum amount of your benefits that can be taxed is 85%, complete the worksheet in Pub 915.

Publication 915
http://www.irs.gov/publications/p915/index.html

Answer 2

The distribution is taxable. It is a retirement payment made due to a disability. No penalty will be owed on this amount.

If this and your Social Security is all of the income, your Social Security benefits are nontaxable.

If you are married, you will owe no tax due to the standard deduction and exemptions. If you are not married and have no dependents you will owe under $600 tax.