Tax Law (Questions About Taxes)/IRA Early Withdraw

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Question
Hello I had to withdraw 3x's from my IRA this last year. Upon doing taxes I am being hit with the 10% penalty and my 1099R shows code 1 in box 7. I do have a disability that will last the rest of my life. Question is can I change that to disability? How or what would my IRA holder need to change the 1099R or for the future? Thanks in advance!

Answer
Hello Chris,

In order to avoid the 10% penalty you have to contact your IRA plan holder and ask what documents they need in order to change code from 1 to 3 (disability).

The most challenging part is making them issue corrected form 1099-R with the different code.
This is an extra work for them but if you are persistent you can get them make the change.

You will have to provide this document every year - preferably in December, before they issue form 1099R. Otherwise code 3 will not be provided based on the prior year medical note.

Hope this helps,
I.J.Zemelman, EA

Tax Law (Questions About Taxes)

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IJ Zemelman, EA MBA

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I am an IRS-authorized EA and principal of a Tax Preparation firm focusing on U.S. Expatriates. We specialize in all tax issues faced by American citizens living abroad - such as foreign earned income, tax treaties, foreign spouse, etc. Visit our website - www.TaxesForExpats.com - for more information.

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18 years professional tax experience, 12 with expatriate taxes.

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Expatriate tax information on www.TaxesForExpats.com

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MBA from Zicklin School Of Business, IRS Enrolled Agent

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