I received a 1099-R from FCMM for my retirement distribution(s) for the last year. Where do I enter this information on my tax return?
After the close of a tax year, your retirement plan sends one, or more, Form 1099-R to each distribution recipient and to the IRS, reflecting any activity of income or rollover distribution from your account. Box 7 will contain a code classifying the type of distribution. (Examples include: 7 for normal distribution; B for Roth distribution; G for rollover to another account.)
Form 1099-R Box 1 lists the gross (total) distribution. Box 2a lists any portion of your distribution that has already been determined to be taxable.
If you qualify and have asked FCMM to designate your distribution as minister housing allowance, Box 2a will be blank and Box 2b will be checked to indicate “Taxable amount not determined”. If only a portion of your distribution was designated clergy housing allowance, the difference between that designation and your gross distribution will be reported in 2a as taxable income. (Note: When an eligible clergy participant signs up for retirement distributions, you indicate whether you wish to have housing allowance designated in the first year and, if so, what portion. In each subsequent year, FCMM designates 100% as housing allowance unless you notify us that you request a lesser amount. Typically FCMM notifies each clergy member who is receiving ongoing distributions of their option to have less than 100% designated and provides a form to return if so.)
The reason the taxable amount has not been “determined” is that you must maintain records to be able to document your eligible housing allowance expenses (not exceeding the fair rental value guideline) and to report any unused amount as taxable income. If you used the full amount of your housing allowance designation, there is no additional income to report.
The amount in Form 1099-R Box 1 is reported on your tax return Form 1040 in Line 16a “Pensions and annuities” and the amount in Box 2a is entered in 1040 Line 16b.
If you did not use the full amount of your designated housing allowance, report the unused amount in 1040 Line 16b so that it will be added to your taxable income.
Do not enter income from retirement distributions on Form SE Self-Employment Tax. Retirement income is not subject to self-employment tax.
If you are using tax return software (examples: TurboTax, TaxAct, H&R Block), be sure to review the entries made to ensure the reporting is done correctly, adding optional supporting details or adjusting entries if necessary to accomplish accurate tax filing.
Note: The information in this article is provided as an educational resource and is based on current regulations as our advisers understand them. FCMM does not practice, and cannot provide, tax or tax-filing counsel. Please consult a qualified tax preparer who understands clergy tax matters if you need assistance.