same guy - 2 IRA withdrawals paid back

[WITAXLADY]

so this same neighbor - took out his Am Funds IRA for 60 days and paid it back with this settlement - fine.. but then he took out another $2,000 from another IRA - different bank - and paid it back and they found out!! so the bank coded it 2 and now wants to code it 3 disability making it taxable income  - on top of the $30,000 code 3 he already took out with Marketplace so you can see where this is going... owing big time..

Any ideas?

Tried  a C-EZ for his homemaker wife who does "daycare" and put $2,000 in an IRA but that reduced it $200 for $2,000

she also sold a gifted house for a loss but there again that is only -$3,000

all this $$$ and the government wants it!

Thx for any insights

D

[joanmcq]

2nd IRA distribution is taxable and subject to penalty unless otherwise exempt. When client put it back, it’s a contribution, possibly deductible. 

[Lion EA]

...contribution, possibly deductible, possibly not, possibly excess...

Why oh why don't they call us before trashing their retirement savings?!

[Catherine]

3 hours ago, Lion EA said:

Why oh why don't they call us before

Because that would make SENSE.  Besides, the barber's brother-in-law said it was FINE - so obviously he knows tricks we don't.  It's our fault for not knowing those tricks.  

[SaraEA]

I'm so sick of picking people up off the floor when they learn their tax liability after these moves.  "But, but they took 10% taxes out."  Yea, that covers the penalty, but now you have to pay the income taxes, go into a higher tax bracket, lose your active participation rental loss, maybe some itemized deductions and exemption amounts, etc.  " Why oh why don't they call us before trashing their retirement savings?!  Plus, what do they think they are going to retire on?

[SaraEA]

PS.  I realize ending a sentence in a preposition makes English teachers crazy, but I subscribe to Churchill's declaration, "That is the sort of bloody nonsense up with which I will not put."

[RitaB]

18 hours ago, WITAXLADY said:

 

Tried  a C-EZ for his homemaker wife who does "daycare" and put $2,000 in an IRA but that reduced it $200 for $2,000

I don't understand the use of the word "tried" here.  Is she saying she had business income when she did not?  Or is she reporting income that she always has and normally does not report? 

I may have this all wrong, and if so I apologize.  If I'm not wrong, I would never let a client decide what income to report, or suggest what income to report.  Besides the obvious (it's wrong), I would not want that to be told, and it will be.  

They made some bad moves and do not qualify for a credit that a lot of people didn't qualify for.  I'd try to keep emotion out of it and just reconcile the income and taxes and credits.  You might try MFS.  It's not your fault that they didn't think taking distributions would increase income.  It's also not your fault that the price of health insurance is obscene.   Tax pros can't make it affordable.  Try not to worry about it, neighbor or not. 

[WITAXLADY]

well it was a suggestion by a financial adviser - and i know she has done daycare in the past - no idea if ever claimed as I have never had them darken my door before...

so ya - why do they not call us first! like ghost busters!!

 

[RitaB]

7 hours ago, WITAXLADY said:

well it was a suggestion by a financial adviser - and i know she has done daycare in the past - no idea if ever claimed as I have never had them darken my door before...

I love neighbors and friends that use me when they need me.  /s

I have turned away very few people in 24 years, but I declined to take back two clients in two days this week.  One was a long time friend who got mad at me last year for telling them I have 10 weeks to make a living and cannot re-do your return every year because you forgot something [you can't manage your W-4 and are making up ship for your side business].  She has not spoken to me in a year and her husband made her ask if they could bring in their stuff.  I apologized at the time for my attitude, I apologized again Sunday night when she texted, but politely told her no.  I have been smiling ever since. 

[RitaB]

7 hours ago, WITAXLADY said:

well it was a suggestion by a financial adviser - and i know she has done daycare in the past -

 

Well, you might ask him how entering $2,000 on Line 12 and removing it on Line 32 would help.  Seriously, I would ask.

[ILLMAS]

29 minutes ago, RitaB said:

I love neighbors and friends that use me when they need me.  /s

I have turned away very few people in 24 years, but I declined to take back two clients in two days this week.  One was a long time friend who got mad at me last year for telling them I have 10 weeks to make a living and cannot re-do your return every year because you forgot something [you can't manage your W-4 and are making up ship for your side business].  She has not spoken to me in a year and her husband made her ask if they could bring in their stuff.  I apologized at the time for my attitude, I apologized again Sunday night when she texted, but politely told her no.  I have been smiling ever since. 

Hugs - If you don’t respect yourself, no one will.

[RitaB]

14 minutes ago, ILLMAS said:

Hugs - If you don’t respect yourself, no one will.

They won't anyway.  You better hold your head up and apologize when you're wrong.  And not take any ship from anybody. 

[Jack from Ohio]

1 hour ago, RitaB said:

I love neighbors and friends that use me when they need me.  /s

I have turned away very few people in 24 years, but I declined to take back two clients in two days this week.  One was a long time friend who got mad at me last year for telling them I have 10 weeks to make a living and cannot re-do your return every year because you forgot something [you can't manage your W-4 and are making up ship for your side business].  She has not spoken to me in a year and her husband made her ask if they could bring in their stuff.  I apologized at the time for my attitude, I apologized again Sunday night when she texted, but politely told her no.  I have been smiling ever since. 

Is there another marker flag in the back 40?

[RitaB]

39 minutes ago, Jack from Ohio said:

Is there another marker flag in the back 40?

Hahahaha, no, I am so happy to be rid of them.  And they fired themselves.  Win/win.   And good luck finding a preparer now. 

[jklcpa]

2 hours ago, RitaB said:

cannot re-do your return every year because you forgot something [you can't manage your W-4 and are making up ship for your side business

She's a prime candidate to use TT that would allow her to see the bal due/refund change with every fabrication additional business expense or deduction she made up forgot on her first attempt.

/sarcasm

[RitaB]

8 minutes ago, jklcpa said:

She's a prime candidate to use TT that would allow her to see the bal due/refund change with every fabrication additional business expense or deduction she made up forgot on her first attempt.

/sarcasm

Yes, this is why God made Turbo Tax.  This ship kind of advanced planning is bullship above my pay grade.  We were about to part ways anyway.  It really could not have gone better.

[ILLMAS]

6 minutes ago, RitaB said:

Yes, this is why God made Turbo Tax.  This ship kind of advanced planning is bullship above my pay grade.  We were about to part ways anyway.  It really could not have gone better.

Ship happens or hits the fan

[Catherine]

6 hours ago, RitaB said:

And good luck finding a preparer now. 

It's EASY to find a preparer now!  However, if you want a COMPETENT preparer - or better yet, a GOOD one, it just ain't happening.

[RitaB]

2 hours ago, Catherine said:

It's EASY to find a preparer now!  However, if you want a COMPETENT preparer - or better yet, a GOOD one, it just ain't happening.

They don't want a good preparer, so that'll work out great. 

[Jack from Ohio]

8 hours ago, ILLMAS said:

Ship happens or hits the fan

 

[WITAXLADY]

ha ha ha