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Subject Author Date
Avoiding Double Taxation R. Pile 03-03-2008
Posted by Paultry on March 4, 2008, 11:30 am
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 R. Pile wrote:
Will an override eliminate the ability to file
electronically?
>> No, messing with the program does not affect your ability to efile, but it
just messes with the software's logic (which is usually right). You should
probably enter the taxable portion as 1k, after checking the points above.
>
> ====> Thanks.
>

My experience with TaxAct is that overriding an item
directly on the 1040 will generate a warning that the return
CAN'T then be efiled. The warning recommends making
changes on the supporting form(s). TaxAct technical support
would probably want to be made aware of this problem so they
can consider a correction or work-around.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Allan Martin on March 4, 2008, 1:09 pm
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> R. Pile wrote:
> Will an override eliminate the ability to file electronically?
>>> No, messing with the program does not affect your ability to efile, but
>>> it just messes with the software's logic (which is usually right). You
>>> should probably enter the taxable portion as 1k, after checking the
>>> points above.
>>
>> ====> Thanks.
>>
>
> My experience with TaxAct is that overriding an item directly on the 1040
> will generate a warning that the return CAN'T then be efiled. The warning
> recommends making changes on the supporting form(s). TaxAct technical
> support would probably want to be made aware of this problem so they can
> consider a correction or work-around.

In addition entering the code P from the 1099-R should not have resulted in
any information flowing to the 2007 tax return. This is how my tax software
behaves.
All software programs are not the same.

>
> --
> << ------------------------------------------------------- >>
> << The foregoing was not intended or written to be used, >>
> << nor can it used, for the purpose of avoiding penalties >>
> << that may be imposed upon the taxpayer. >>
> << >>
> << The Charter and the Guidelines for submitting posts >>
> << to this newsgroup as well as our anti-spamming policy >>
> << are at www.asktax.org. >>
> << Copyright (2007) - All rights reserved. >>
> << ------------------------------------------------------- >>

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by removeps-groups@yahoo.com on March 4, 2008, 1:10 pm
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> ====> No. But it was my understanding that the excess contributions
> were taxable in the year of the original contribution (2006, in this
> case), but any earnings produced by the excess contribution were
> taxable in the year they are returned to the taxpayer (2007, in this
> case).

Well, if the 12k wasn't reported in the 2006 return, then it should be
reported in the 2007 return. Is Box 4 (federal tax withheld) non-
zero? If not, then you may have an underpayment penalty for 2007.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Allan Martin on March 4, 2008, 3:16 pm
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>
>> ====> No. But it was my understanding that the excess contributions
>> were taxable in the year of the original contribution (2006, in this
>> case), but any earnings produced by the excess contribution were
>> taxable in the year they are returned to the taxpayer (2007, in this
>> case).
>
> Well, if the 12k wasn't reported in the 2006 return, then it should be
> reported in the 2007 return. Is Box 4 (federal tax withheld) non-
> zero? If not, then you may have an underpayment penalty for 2007.

If not reported already in 2006 then amended return(s) should be filed for
Federal and State.



>
> --
> << ------------------------------------------------------- >>
> << The foregoing was not intended or written to be used, >>
> << nor can it used, for the purpose of avoiding penalties >>
> << that may be imposed upon the taxpayer. >>
> << >>
> << The Charter and the Guidelines for submitting posts >>
> << to this newsgroup as well as our anti-spamming policy >>
> << are at www.asktax.org. >>
> << Copyright (2007) - All rights reserved. >>
> << ------------------------------------------------------- >>

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by removeps-groups@yahoo.com on March 4, 2008, 3:17 pm
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On Mar 4, 10:10 am, "removeps-gro...@yahoo.com" <removeps-
gro...@yahoo.com> wrote:

> Well, if the 12k wasn't reported in the 2006 return, then it should be
> reported in the 2007 return. Is Box 4 (federal tax withheld) non-
> zero? If not, then you may have an underpayment penalty for 2007.

Actually, it may be necessary to file an amended return for 2006 and
report the 12k in line 7 (wages). But there would likely be
underpayment penalties on 12k. Seems unfair. But then again because
of 12k less income in 2007 you could qualify for the stimulus check if
you weren't previously qualified. I wonder if you could report the
whole thing in 2007 on the basis that you're a cash basis taxpayer,
but the rules suggest no as the excess deferral did happen in 2006.
In the 2007 return report the 1k earnigns and any withholding in box
4. See http://www.irs.gov/pub/irs-pdf/i1099r.pdf, all of page 5.
Seems you should have received two 1099-R's -- one for the excess
deferral with code P (to be used on the 2006 return) and $0 in box 4,
one for the earnings with code 8 (to be used on the 2007 return) with
some value in box 4, and there should be no IRA withdrawal penalty in
2007. Regarding TaxAct, I'd recommend that when entering the 1099-R
info, just set box 1 and 2a to $1000.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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