IRA Early Distribution/Reporting Error

[mm539399]

What is the name of your state? IA

I took an early distribution in 2006. On my return for 2006, I incorrectly reported it as having been rolled over. I want to correct it, clear myself and pay up. A few questions:

1. How do I go about doing this? Do I simply file an ammended return? I originally used Turbo Tax. How should I report the change?
2. What risk am I at to legal ramifications for under-reporting?
3. What arrangements will the IRS make for payment plan and how do I go about this?

Thanks.

 

[abezon]

1. File a 1040X. The help files will tell you how to do this.

2. None. The IRS just wants its money. Plus interest. However, if your tax goes up by $5,000, you'll get smacked with penalties (25%!).

3. You can ask for an installment agreement or just pay then whenever they send you a bill. If you can pay 10% of the bill montly, try to avoid an installment agreement, since there's a fee to set it up & the terms are not flexible at all.

 

[LdiJ]

What is the name of your state? IA

I took an early distribution in 2006. On my return for 2006, I incorrectly reported it as having been rolled over. I want to correct it, clear myself and pay up. A few questions:

1. How do I go about doing this? Do I simply file an ammended return? I originally used Turbo Tax. How should I report the change?
2. What risk am I at to legal ramifications for under-reporting?
3. What arrangements will the IRS make for payment plan and how do I go about this?

Thanks.

You will need to file an amended return. I recommend that you use a professional to do it, because they are truly a PAIN to do by hand. I am a professional and I won't do one by hand under any circumstances...LOL.

The amended return will tell you how much you owe the IRS. It would probably be best to send in an Installment Agreement Request with the amended return. You will owe regular income tax on the amount of the distribution, plus a 10% penalty...and if you got EIC, you will likely be paying back a portion of that (if not all) as well.