Incorrect IRA Distribution: Please Help

[Roxy10Girl]

What is the name of your state (only U.S. law)? Nevada

 

[Roxy10Girl]

Incorrect IRA Distribution

Hello. Sorry my first message didn't seem to post. Last year, my husband requested $2,500 from his IRA. They sent him a check for $22,500 - $25,000 minus 10%. We immediately sent $20,000 back to rollover and kept the other $2,500. We never received any tax forms and finally got them online. I usually do my own taxes, but got confused with this and filed an extension. We don't have to pay taxes on the whole $25k as if it was income do we? When I put in the amount, the system came back with a huge amount we owed. Can anyone tell me what I am doing wrong? We do have a form 5498 that states we rolled $20k back within 60 days. Thanks in advance!

 

[PayrollHRGuy]

First check the account and check and see if the $22,500 is in there.

If it is contact the institution and get corrected tax forms for the amount you actually withdrew.

 

[adjusterjack]

We do have a form 5498 that states we rolled $20k back within 60 days. Thanks in advance!

If it shows $20000 in box 2 then you don't show the $20,000 as income.

You should have also gotten a 1099 for the $2500. You pay the tax on the $2500.

 

[FlyingRon]

Actually, he should have gotten an 1099 for 25,000. The reporting institution has no idea that he was going to roll it over.

There's more involved here as well. You don't owe the 10% penalty on anything you properly roll over. Frankly, I'd have sent the uncashed check back and told them to make it for the correct amount.
He needs to make sure whoever does his taxes this year understand just what happened here so you don't end up paying too much tax.

 

[LdiJ]

Hello. Sorry my first message didn't seem to post. Last year, my husband requested $2,500 from his IRA. They sent him a check for $22,500 - $25,000 minus 10%. We immediately sent $20,000 back to rollover and kept the other $2,500. We never received any tax forms and finally got them online. I usually do my own taxes, but got confused with this and filed an extension. We don't have to pay taxes on the whole $25k as if it was income do we? When I put in the amount, the system came back with a huge amount we owed. Can anyone tell me what I am doing wrong? We do have a form 5498 that states we rolled $20k back within 60 days. Thanks in advance!

Ok...your husband, on paper, made a 25k withdrawal from his IRA with 10% withholding.

He rolled 20k back into the IRA. That left a 5k withdrawal with 2500.00 in withholding. You should not owe a lot of taxes, you should get a bit of an extra refund.

You don't know how to deal with that with the normal software that you use to file your taxes. No one here can tell you what to do to fix that because we cannot see what you are doing. You need to use a tax professional this year to do your taxes.

In most professional software its a really simple thing to handle.