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IRA DISBURSEMENTS PRIOR TO AGE 59 1/2 WITH CODE 1 IN BOX 7 OF THE 1099-R
Are IRA disbursements prior to age 59 1/2 with code 1 in box 7 of the 1099-R to be treated as taxable income and reported on line 4b of the form 1040, regardless of using “Cracking the Code” to reduce your wages to $0? I was not eligible for any exceptions at the time of the disbursement.
2 Comments-
No. Were your earnings that went into the retirement fund from “Business or Trade Income? As the course teaches, Under 26 U.S.C. § 3401(a), “wages” means all remuneration for services performed by employee for employer. But “employee” only means federal officers and “employer” only means government agencies.
“Wages” under federal law means compensation paid to federal employees for federal employment services. Your paycheck from private employment isn’t “wages” unless you voluntarily elect to treat it as such by signing W-4.
Therefore if you were not a federal employee earning “wages” the private revenue you earned and put into the retirement account was not taxable and therefore should not be now. Fill out your 4852 for the 1099-R appropriately.
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@Kury Thank you for taking the time to reply! I truly appreciate it!
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