Catherine Posted February 7, 2009 Report Posted February 7, 2009 Client took mucho money out of IRA in late 2007 for first home purchase. No, she did NOT check with me first. She paid the early withdrawal penalty on all but $10K with her 2007 taxes, and paid income tax on the total. She ended up NOT finding a house within the time limits (which expired in first quarter 2008). So now she owes penalty on the $10,000 as well. But it was all on the 1099-R for 2007. Any better way to handle this in ATX besides putting the penalty amount on Line 1 of the 5329 and then adding a statement explaining why this amount is not included in income? Thanks. Catherine Quote
imjulier Posted February 7, 2009 Report Posted February 7, 2009 How about amending 2007? I'm not sure how this was done to not have the IRS assess the additional penalty anyway and send a notice....or maybe enough time hasn't passed for the 2007 notices yet. Julie Quote
Catherine Posted February 7, 2009 Author Report Posted February 7, 2009 How about amending 2007? I'm not sure how this was done to not have the IRS assess the additional penalty anyway and send a notice....or maybe enough time hasn't passed for the 2007 notices yet. Julie But the 10% penalty wasn't due in 2007 -- the client had until March of '08 to find a house before the early withdrawal penalty kicked in on this last portion. Therefore, it's a penalty due in 2008. Catherine Quote
TAXBILLY Posted February 7, 2009 Report Posted February 7, 2009 File the 5329 by itself. taxbilly Quote
Catherine Posted February 7, 2009 Author Report Posted February 7, 2009 File the 5329 by itself. taxbilly No statement to explain why there is no extra $10K of income? Quote
TAXBILLY Posted February 7, 2009 Report Posted February 7, 2009 I would attach a statement saying the tax on the income was paid in 2007. taxbilly Quote
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