Reply To: Reason for omitting Gross Distribution Amount (old) Lines 15a/16a

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#2204
Alan S.
Participant

Kaneohe, I don’t know for sure but will make a guess. Lines 15 and 16 (now line 4) were historically associated with a very high % of fully taxable distributions and IRS tracking only needed the b line for tracking because the a line would be identical. In the last two decades there has been an explosion of portability options, Roth accounts, QCDs, and the like. The instructions have always factored in ALL distributions for a given line, so if ANY distribution on line 16 was partly taxable then all line 16 distributions would be shown on 16a, not just the partly taxable one. So the IRS is saying that they do not need or want the a line filled out if it would be the same as b and not helpful to their matching efforts.

Now we have a long list of exceptions to the general rule that taxpayers have to wade through if they paper file. If you use a program like free file fillable forms and enter a number on a which is the same as b, the e file will reject. More comprehensive programs will probably handle this and produce a 1040 without an amount on the a line according to the rules.

While it’s tempting to think these rules stick around because of an antiquated IRS computer matching program, and will go away once the systems are upgraded, I am not so sure. Now that 15 and 16 have been consolidated to line 4, the IRS has lost the advantage of IRA separation in the matching process. I just checked and expected to see an instruction that if EITHER and IRA or pension exception existed, then ALL distributions needed to show on line a, but did not find that. The IRA and pension exceptions are still separate even though they all go on line 4.

That said, if anyone files a paper return and shows an amount on line a when they shouldn’t, I don’t think it will cause any issues. And if you are using a tax program, it should reflect all those exceptions. So taxpayers don’t need to worry about this as far as I can see, and can let the IRS matching program deal with it.