RitaB

We all know what you mean by this! I don't always learn my lesson, but when I do, you can bet it was the hard way.

I would recommend to the client to amend and pay 2014 and 2015 taxes owed ASAP to limit interest and penalties. This is what I'd do whether or not 2013 was being audited. I wouldn't try to guess at what IRS is going to do, or how long they will take to do it - just do what should be done to file correct returns.

Laugh at you?? I'm taking notes...

If it's mostly for marketing purposes. If not, ignore me.

Yes, me too. You can go too far in either direction. LOL.

I like "Marketing Seminars Expense".

There's a picture in the dictionary, in fact.

Andrea, if you want to keep this client when he's an S-Corp, there's no time like the present to get good at something new. We are all terrible at things until we are good at them. You can do it. Heck, I think half of my job as an adult is to Google things. We are here for you, too. And good ole IRS publications and instructions are invaluable. They act like they hate you at first, but it's an act to see if you'll hang in there.

I used address at top of letter. Thank you, that was my main concern - which address to use. Client is picking up my short letter that he will sign. Today or tomorrow, he said. Attached are copies of cancelled check, front and back, and first page of CP14. I'm paying for the certified mail, return receipt requested. Will let you know what happens.

Yes, I kept it very short. I didn't see any reason to be windy: "Taxpayer's timely payment was credited to an incorrect or non-existent account. See attached copy of check front and back. Hugs, Rita".

Me, too! Now that we're talking about it, I've never seen a 1099-C for cancellation of medical expenses, either, and I hear of our hospital writing off medical expenses for my clients frequently. I'm wondering what the difference is between free shoes and free medical care. Unless it's because we all just know that a Tylenol doesn't cost $40 (pssshhh), and the providers were shooting at the moon...

I have one who also just did this. He didn't ask my advice, just called and asked me why the bank kept insisting he decide whether he was withdrawing or recharacterizing. Me: "You are converting. It's a conversion. Can I run some numbers for you..." Client: "That's exactly right, it's a conversion. I have read everything there is to read on this. Thank you. No, I've got it figured out." Click. OK, you probably didn't read EVERYTHING there was to read... And using a bank for your investment broker is another thing you might reconsider...

Yes, but we are talking about the 10% penalty that applies to conversion amounts not left alone for five years or until age 59.5. They are subject to 10% penalty to discourage people from converting traditional IRAs and then taking out the conversions penalty free. Here's a good article: http://www.fool.com/money/allaboutiras/allaboutiras07.htm

Yes, the correct SSN is on the front of the check and the incorrect SSN is on the back of the check. That's how I made my guess at what happened, cause TP had no clue. All I'm saying in the letter is the payment was made but was not credited to taxpayer's account. Thank you for your attention in this matter. Not taking or assigning blame. Keeping it short and sweet. The copy of the check says enough.

David, on Form 5329, there is a worksheet for line 1. You can enter the amount subject to penalty on the worksheet. It'll say something like "2012 Roth distributions subject to tax on early distributions."

Yes, you are correct. I really don't even know how the program would know how to handle this. I think you'll have to dink around with it. But, I don't know, as I've never had this situation, and I have either learned a lot today or you should ignore me completely.

Are we talking about a 2015 withdrawal? You say "several years," [after the 2010 conversion] so I assume it's NOT a 2012 withdrawal that we are discussing. If it's a 2015 distribution of a 2010 conversion, the five year period beginning at conversion (not payment of tax - we don't care about that) has been met. She doesn't need to be 59.5 to avoid the 10% penalty on conversion amounts. There is not a penalty on withdrawn conversion amounts (just earnings) if the five year period has been met, regardless of her age. Earnings would be subject to the penalty if under 59.5, yes. I think I have that right... As to whether the program is treating it correctly, I'd just know what is correct and spank the program till it gets there.

Yes, I do have the box checked. Thanks! But, actually, I'd rather not call them, either...

Well, my client got a CP14 because his payment did not get credited to his account. He has the cancelled check. Instructions say to call the number on the Notice if you disagree. I prefer to mail a short letter, copy of front and back of cancelled check, and staple both to copy of CP14. Not charging client, as it may be my fault. I had a digit wrong on his SSN, and I may not have printed a new 1040-V. Or he may have used the incorrect one - we don't know. I would just like to handle it for the client, and not have him calling IRS. Paper trails are underrated. No fax number was provided. 1) Are you with me? 2) Would you use the IRS address on the bottom stub? The stub is for payment, and this is proof of payment.

Yes, if I understand it correctly, and we're talking about a 2015 distribution, she's met the five-tax-year period that starts with the year the conversion was distributed from the regular IRA (2010). 2010, 2011, 2012, 2013, 2014 have passed. * I'm going to go on record as admitting that I may or may not understand it correctly, and why oh why won't people stop robbing their retirement accounts? Leave them alone. Please.

I found this thread from 2009 and enjoyed reading it very much. Might be helpful somewhere along the line for someone. And like Tom said in the thread, "the fact that IRS has to work harder is not my issue."

I agree that IRS originally most likely did not want an amended return, just a response, but since the taxpayer has been messing around with it herself for years (we know this because she's afraid to file 2013, 2014, and 2015), and I can amend a return faster than I can call and be on hold and explain and discuss and prepare an answer, preparing an amended return seems far easier to me. I believe they'll take it and eventually the situation will be resolved without further aggravation to me. And I'll be honest, aggravation to me is a consideration.

I think I'd prepare an amended return if you can get a copy of her original 2011 and the letter showing how IRS adjusted her 2011 return. The deadline to claim a refund has passed, but you're not doing that. I don't think there is a deadline to correct an incorrect return. I would correct the IRS adjustment. I would do whatever I would have done if I had dealt with the situation on the original return. Meaning, complete the Schedule / Form IRS wants to see (is it Sch C?), enter the income amount reported on the 1099 (is it 1099-Misc, box 7?). Then, subtract the amount with an explanation. Obviously get a POA in the meantime. Sometimes it's all about the paperwork. Give them some paperwork. I realize answering the notice would have been the thing to do, but I'd just do the amended return at this point.

When in doubt, hug it out.