2023 Form 1099-R: Reporting of disability annuity payments to first responders and other disabled taxpayers
The IRS made changes to the
2023 Instructions for Forms 1099-R and 5498 to help clarify how to
report disability annuity
payments to first responders or other taxpayers on the Form
1099-R.
Revenue Ruling 85-105, 1985-2 C.B. 53 states that disability
retirement payments made to a taxpayer - under a workmen’s
compensation act or under a statute in the nature of a workmen’s
compensation act - as compensation for personal injuries or
sickness incurred during the course of employment may not be
subject to federal income tax.
A new paragraph was added to the 2023 Instructions:
Box 2a, Taxable Amount, now references Rev. Rul. 85-105 to help you
determine the taxable and/or non-taxable amount of the disability
payments. If the annuity payments are fully non-taxable, there
should be a zero in box 2a.
A reference to Rev. Rul. 85-105 was added to the Guide to
Distribution Codes:
Code 3 – Disability, is used to report the non-taxable part of the
disability distribution on the Form 1099-R.
Editor in Chief Harvey Randall served as Director of Personnel, SUNY Central Administration, Director of Research , Governor's Office of Employee Relations and Principal Attorney, Counsel's Office, New York State Department of Civil Service.
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