SEP IRA

Archive for June, 2007

BANISHED VETERANS Deporting Our American Veterans

Rolling SEP IRA into 401K – Realty Academy – Chris Bird.mov

Question: How difficult is it to file a 1040X?

I have some additional IRA/104K information from my old employer that I forgot to include.

Answer: I’m surprised that the CP2000 “left out the federal tax withheld”–are you sure? The CP2000 is computer generated using the form 1099-R. This is not usually an area open to question.

Remember, if they held out 20%, 10% was for the penalty and 10% was for taxes. If you had any other income, it was probably already in the 15 or 25% tax brackets and that’s what cause you to be short. By the way, the 20% is common, but not true in all cases.

At any rate, here’s the tip that several of us use:

1. Get a blank copy of the tax return for that year at irs.gov, enter the year in the search box and use the first link to get all forms for that year.

2. Fill out the return as if you would have if you had included all income/withholding. Find your copies of the forms; if you don’t have them, request them from the IRS by phone or by form 4506-T.

3. Using the CP2000, fill out column A of the 1040X. (The critical lines are there, AGI, taxable income, total tax and total payments. You can figure out the rest. Do not give add in interest; put the payments you’ve made on line 17.) Use the dummy return to fill out columc C of the 1040X. Get out your calculator and manually calculate columnb, one line at a time. Negative numbers go in (). Don’t forget to include the 10% penalty on line 9.

4. Determine if you actually have missing withholding anywhere. Be sure to attach a copy of the form showing that withholding to the 1040X.

I think you will be disappointed. On the other hand, it may get you to understand how the math worked.

Brian Gilder’s Wall Street Stimulus Plan