SEP IRA

Archive for May, 2008

Question: Tax question?

Am I allowed to withdrawal money from a SIMPLE IRA for the purchase of my first home without it being taxed?

Answer: Although you may take out up to $10,000 from your IRA for the purchase of a first home without the 10% IRS penalty, you are still liable for the taxes on the withdrawal.

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Question: IRS Shorted My Refund… Does Anyone Have Experience With This?

I filed my 2010 tax return in March. I was owed a refund of about $7,400 but I received a direct deposit refund of $6,500. I called my accountant and inquired about the shortage. He said he would call the IRS in week, after tax season. In the meantime, I got a letter from the IRS saying they with held a portion of my refund because they “had questions about some of the items on my return.” They did not say specifically what they questioned but they would send me a letter in approximately 3 weeks with more information.

I am at a loss as to what they question? My return is primarily based on W-2 income, a non-deductible IRA, a SIMPLE IRA, some interest income, and not much else.

Does anyone have any experience with a similar letter from the IRS?
My gross W-2 income was $211,000 and the only deductions were mortgage ($35k), capital gains loss carry over ($3k), personal exemption ($3212 reduced from $3650 due to phase out)

Answer: The big return doesn’t surprise me – you make 6-figures and claim 0…

It sounds like maybe you forgot to include a transaction or something. You say you don’t have much unique, so just wait until you get the info back from the IRS.

I had something similiar a few years ago and the info I got from the IRS was very understandable.

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Question: Simple tax questions that I don’t know the answers to?

Last week, I did my taxes with Tax Cut Software as I have done for several years in the past, because I have one W-2, mortgage interest, property taxes and that’s about it. Well, when I looked at the projected refund I would be receiving, I fell down. It is about half of what I normally receive ($800 down from $1600). To isolate the problem, I went back to the W-2 section and entered last year’s W-2 info and sure enough….it went back up to $1600. I can only guess that I jumped to a higher tax bracket earning about $64k in ‘06 vs. just over $70k in 2007.

Questions:
1) Does the above sound correct?

2) For future reference, will contributing substantially more to my 401K knock my earnings down to the lower tax bracket gaining me the higher refund?

3) Can I still do anything this year to get the higher refund….I heard snippets of someone saying something about opening an IRA with $4k or $5k or whatever the max is to knock down earnings to get me the higher tax refund?

Answer: question 1 yes
question 2 yes
question 3 yes and u have till april 15 to do it, plug the different number in and u will see the result of reducing ur taxable income.

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