IRA w/d Tax question

[JohnDoe]

Do you have to report a Rollover IRA early w/d when you do you local taxes?

 

[Jeremy]

Withdrawals, whether early or qualifying, are generally subject to federal, state, and local taxes if applicable when withdrawing pre-tax money.

 

[JohnDoe]

Thanks.

What's the worst that could happen if you choose not to report it on local tax? Penalties, interest, etc...Could that result in a federal tax audit?

Can you call your local tax office and set up a payment plan or request an extension?

 

[Jeremy]

Well, not reporting taxable income is naughty I would think that most local tax authorities have their own set of rules regarding penalties, interest, extensions, etc. That is something you'd probably have to check with your local tax office to see what options are available.

 

[youbet]

Thanks.

What's the worst that could happen if you choose not to report it on local tax? Penalties, interest, etc...

You'll be subject to whatever penalities your local governing body specifies for failing to report income. Since, I believe, 1099's are issued for withdrawals from deferred accounts, detecting your failure to report will likely be noticed.

When they notify you of your omission, tell them you were just testing to see if their computers were set up to check for this. They always get a kick out of that! I understand some local authorities arrange to have your skin pulled off in narrow strips with rusty tongs.

 

[UncleHoney]

You need to check your local tax codes. Many of them collect the taxes in the year the money was earned, even though Fed and State taxes may not be collected.

Here's the local info for Columbus Ohio. See Item 3. I just check one of my old paychecks from last fall and taxes were taken out of total gross pay for local taxes. In Columbus you don't pay any taxes on interest, SS or pensions. Not sure where or if company contributions to things like 401K plans are taxed. Maybe something in the cafeteria plan thingie, not sure there cause I always had to buy my own lunch.

What is Taxable?

1. Bonuses.
2. Compensation paid in property or the use thereof at fair market value to the same extent as taxable for federal tax purposes and so indicated on the W-2 form.
3. Contributions made by or on behalf of employees to a qualified deferral plan (401K and the like) - taxed at year earned, deferral not permitted. Exception: employer matching contributions offered under a cafeteria plan are not taxable. Deferrals even under a cafeteria plan are always taxable.
4. Contributions made by or on behalf of employees to a tax-deferred annuity or stock purchase plan (includes any plan where employee has the option to defer).
5. Contributions made by or on behalf of employees to a non-qualified deferred compensation plan.
6. Cost of group term life insurance over $50,000.00 (unless part of a cafeteria plan).
7. Director's fees.
8. Short-term disability pay if received as a benefit from employment (includes third party plan) prior to 6/30/2007.
9. Adoption assistance payments (unless part of a cafeteria plan).
10. Excess employee discounts.
11. Golden parachute payments.
12. Income from guaranteed annual wage contracts.
13. Income from jury duty.
14. Income from wage continuation plans (includes retirement incentive plans and buy-outs).
15. Income received as a result of a covenant or agreement not to compete, which relates to employee wages.
16. Interest on below market loans.
17. Moving expense reimbursements (follow Federal rules but non-reimbursed expenses are not deductible).
18. Pre-retirement distributions from retirement plans (except previously taxed income from deferred plans).
19. Prizes, awards and gifts - if connected with employment.
20. Profit Sharing.
21. Royalties (unless derived from registered copyrights, patents or trademarks).
22. Severance pay.
23. Sick and/or vacation pay.
24. Stipends - if work required (vow of poverty not recognized).
25. Stock bonus incentive plans.
26. Stock options.
27. Strike benefits paid by employer.
28. Supplemental unemployment pay paid by employer.
29. Taxes paid by employer on employee's behalf.
30. Tips.
31. Union steward fees.

NOTE: This list is intended for reference purposes only. It may not be all inclusive and is subject to revision without notice.

 

[jazz4cash]

I get 1099's for my early withdrawals. There is box that could be They are reported on line 15 of form 1040 so they are included in my AGI and therefore rollover to my state return. I use turbotax which queries me to determine if the distribution is a rollover or excepted from the 10% penalty. Many state returns start with your Federal AGI or taxable income, so you would have to actively deduct the distribution amount (as opposed to just omitting that amount from the state return).

 

[OAG]

Thanks.

What's the worst that could happen if you choose not to report it on local tax? Penalties, interest, etc...Could that result in a federal tax audit?

Can you call your local tax office and set up a payment plan or request an extension?

Penalties are different for every state. Depending on what they can prove (ow what you will admit, if caught), it could be as little as payment (along with some penalties) up to an including maybe felony perjury (read the fine print where you sign the tax return). Not a good idea in any case. I am reasonably sure, if you contact them, they will work out a payment plan and otherwise work with you to get the money.