Penalty abatement-missed RMD

[[email protected]]

Should the TP pay the penalty when asking for the abatement or wait until they get a notification from irs

[jklcpa]

22 minutes ago, [email protected] said:

Should the TP pay the penalty when asking for the abatement or wait until they get a notification from irs

Are you a tax professional able to use the IRS PPS line?

[[email protected]]

yes

 

[[email protected]]

I am asking for an abatement from the RMD penalty

 

[jklcpa]

6 minutes ago, [email protected] said:

I am asking for an abatement from the RMD penalty

 

This doesn't fall under the first time penalty abatement if this is for a tax year that you are filing now.  Fill out the 5239 and see the specific instructions for lines 52-55 of how to indicate waiver of the penalty. Return must include a statement of reasonable cause, and it's always a good idea to state that the taxpayer is aware and has/or will immediately rectify the situation.

[[email protected]]

Is it better to have TP send in payment with the 5329 or wait for notification of denial or approval from IRS?

 

[jklcpa]

27 minutes ago, [email protected] said:

Is it better to have TP send in payment with the 5329 or wait for notification of denial or approval from IRS?

 

The way to request the waiver is to NOT pay it and properly fill out the 5329 as described in the instructions.  If you fill in the 5329 and pay the penalty, then you aren't actually requesting the waiver on that portion of the missed RMD.  FWIW, I've never had a waiver denied or penalty assessed if I've properly filled out the 5329 as instructed and attached the statement of reasonable cause with how the TP rectified the problem.

As an example, if the RMD was $4,000 and the actual distribution was $0 AND you want to request the waiver on the entire RMD, you would fill those two amounts in on lines 53 and 53.  Then on line 54 "RC $4,000" to the left of the box in the text area, line 54 in the amount column itself will print as -0-.  That will cause line 55 to calc as -0- and filing this will trigger IRS to review the form and your attached statement.