Tax Season 2018 Q&A

Q: I inherited an IRA from my cousin. He passed away in November 2017 at age 72 and he hadn’t taken his 2017 RMD yet, so I took it in December. Is this RMD reported on his estate tax return or my 2017 tax return?

A: Your tax return. Year of death RMDs are reported on the recipient’s tax return.

Q: Are my Social Security benefits taxable?

A: Maybe. It depends on several factors including your income, filing status and income you received from other sources.

Q: I am 55, still working and have three IRAs. Can I contribute $6,500 to each IRA?

A: No. The IRA contribution limit is an aggregate limit.

Q: May I deduct IRA losses on my 2017 tax return?

A: Not unless you withdraw the entire balance from all of your IRAs of the same type. Losses and gains are not taken into account on your tax return while your IRA is still open.

Q: If I have a Roth IRA, aren’t all of my distributions automatically tax and penalty free?

A: No, only qualified Roth distributions are tax and penalty free. There are circumstances where there may be income tax due and/or an early distribution penalty could apply.

 

 

[siteorigin_widget class=”WP_Widget_Archives”][/siteorigin_widget]

More Updates

IMPORTANT TRUST DEADLINE APPROACHING

For trusts that inherited an IRA in 2019, an important deadline is approaching. The due date to provide required trust documentation to the IRA custodian to ensure that the longest payout period possible is available for the inherited IRA is October 31, 2020. Generally, only individuals who are named on an IRA beneficiary form can

Read More »

CRDS AND ROTH CONVERSIONS – ABUSE OF THE RULES?

The coronavirus-related distribution (CRD) rules for Roth conversions have a gaping hole. An “affected person” (as we have defined in previous blogs), is entitled under the CARES Act to withdraw up to $100,000 from their IRA or workplace retirement plan. A CRD avoids the 10% early distribution penalty for those under 59 1/2, can be

Read More »

Rolling Over an RMD

Like most people’s lives, the retirement world is upside down. This is made evident by a single statement: “Required minimum distributions (RMDs) can be rolled over.” Yes, that is the new normal—at least for this year. RMDs are considered the first money out of an IRA and workplace plan. Typically, these dollars are ineligible to

Read More »
Scroll to Top