2016 Income Tax Status

[SecondCor521]

So I just finished my tax. I Still need to go back and check on a few things. But it's 95% done. I have a question if anybody can answer me here. In the past when I had a rollover, trustee to trustee transfer, but I still received a 1099-R form. But I did nothing as in nothing need to be filled out, but the IRS still sent me an electronic audit and I had to send papers proving I rolled my IRA to another institution.
Is it better to send the rollover with my tax return to avoid this kind of audit. It was a large sum of money so I'm sure it will perk the IRS interest. I just want to avoid this kind of audit just in case I'm on long vacation and don't get the notice in time.

If you're using a tax program, make sure to enter the 1099-R, with the gross distribution from box 1 and the distribution code G in box 7.

If you're filling out a form 1040, put the total from box 1 in box 16a, put zero or leave blank box 16b, and write "ROLLOVER" between "b Taxable amount" and box 16b.

 

[Fedup]

If you're using a tax program, make sure to enter the 1099-R, with the gross distribution from box 1 and the distribution code G in box 7.

If you're filling out a form 1040, put the total from box 1 in box 16a, put zero or leave blank box 16b, and write "ROLLOVER" between "b Taxable amount" and box 16b.

Thank you. I didn't even do that.

 

[RobbieB]

I called the only broker I didn't have a 1099 for yet, they said mailed this week. I'll file end of March / early April like always.

 

[aaronc879]

Did my taxes on March 3rd, the day after getting my last tax form. Low income so paid almost nothing for federal or state tax but self employment tax is a killer. I went back to W2 income this year. Taxes will be far less complicated now and my employer can pay half the FICA.

 

[jim584672]

Just did 2016 with Turbotax Deluxe ($40 Walmart). The return included stock sales which got imported from the broker. Also a very small Roth conversion. Deluxe works Premier was not needed.

Fed taxes owed $0 thanks to qualified dividends.

 

[Dawg52]

Finished my taxes today using TT Premier(thanks Fidelity for a free copy). Small refunds due and will apply to first qtr estimated taxes. Will sit on it a couple of weeks as I have received corrected forms in the past. I always feel better when getting the grunt work done. Might have to pop a top on a cold one.

 

[SecondCor521]

Thank you. I didn't even do that.

Well, if you do, I hope you don't get audited this time! I'm doing exactly the same on my taxes for 2016, so my hope is also for myself as well!

 

[braumeister]

went back to W2 income this year.

Dull, boring and conventional.

But definitely simpler and less stressful. Here's hoping you made a good move.

 

[audreyh1]

Dammit! Fidelity still hasn't posted their foreign tax info for individual investors for their mutual funds! Only, the corporate version has been posted for a while.

We're all checked, reviewed, etc. just waiting on this one last document.

 

[scrabbler1]

If you're using a tax program, make sure to enter the 1099-R, with the gross distribution from box 1 and the distribution code G in box 7.

If you're filling out a form 1040, put the total from box 1 in box 16a, put zero or leave blank box 16b, and write "ROLLOVER" between "b Taxable amount" and box 16b.

Forgot about mentioning the "ROLLOVER" note on the tax form. Thanks.

 

[Fedup]

Well, if you do, I hope you don't get audited this time! I'm doing exactly the same on my taxes for 2016, so my hope is also for myself as well!

I just input the two 1099-Rs into TurboTax and the word ROLLOVER is filled by TT below line 16a. It's a great feeling. I didn't know I had to do that, now I know.

 

[pixelville]

I just input the two 1099-Rs into TurboTax and the word ROLLOVER is filled by TT below line 16a. It's a great feeling. I didn't know I had to do that, now I know.

The rule of thumb I use is "if I get a 1099, I enter it". Else when IRS system does its automatic match against all the tax documents filed by the payers for my SSN, it will trigger red flags/audit notices.
Tax software (for the most part) is good enough to figure out what part is taxable and where it should end up on the 1040.

This is also how we have been trained as IRS certified taxaide volunteers.

 

[pixelville]

That brings me to another question....... 2 actually.

1) Are distributions from IRAs considered Earned income or passive?
2) Are SS Payments Earned or Passive?

In IRS termilogy IRA distributions are not earned income. SS payments are also not earned income. But maybe you don't want IRS definition?

1) earned
2) AFAIK neither, I'd term them "active"

 

[target2019]

Yes, IRA distribution is not earned income in IRS book. It gets treated differently than wages, for example. But it is income.

My state return was accepted, a few days after Fed return.
So far, glad we e-filed state this year.

Now to complete in-laws returns.

 

[Badger]

Taxes done. AARP volunteers at the local library does them for free. Simple enough for them to do on their program with SS, pensions, dividends, and interest with standard deduction. I used to do it myself on the free program from Vanguard to compare but I'm tired of that so I just bring in may paperwork and they file for me after we review. Nice freebie.

Cheers!

 

[scrabbler1]

After receiving all the 1099s and other forms, and discovering a few small things specific to my return, I will end up owing a lot less than I thought back in January. To better balance my cash flows, I usually wait until I receive my April dividend payments before sending out my tax returns. But because I will owe far less than usual (less than $200 between both returns), I have printed out my tax forms this week and will mail them out today at the post office.


I also finished up my friend's returns. He, too, ended up owing very little on his state return and decided to roll over into his 2017 return the small amount he'd be receiving as a refund on his 2016 return. I'll be mailing out his returns from the post office, too.


My LF told me she wants to get her taxes done, so I will finish up hers this week and she will mail them out within a week. She owes a small bundle to the feds because she is intentionally underwithholding taxes on her paycheck and doesn't wish to change it. (She is not anywhere near owing penalties.) She is due a tiny refund from the state, so she has also chosen to roll over that small amount into her 2017 state tax return.

 

[Alan]

In IRS termilogy IRA distributions are not earned income. SS payments are also not earned income. But maybe you don't want IRS definition?

+1

I would think earned income is subject to FICA and Medicare taxes. Pensions, IRA distributions, SS benefits, and other passive income is not subject to those "payroll" taxes.

 

[Fedup]

I have another tax question regarding overseas pension distribution. Pension is like an IRA or 401k, except I didn't receive a form like 1099-R. Tax was withheld. Should I create a 1099-R, TT has this option. Or should I just put them in 1040 and then claim foreign tax credit. The last option is what I have, but with the 1099-R option, I get more money back, plus there is an official record or paper trail for that money. Any comment or experience in dealing with this type of situation is greatly appreciated.

 

[mickeyd]

Filed my Federal taxes on 2/23 and received my refund in my account on 3/3. Used TT ($25 @ USAA). EZ PZ.

 

[Alan]

I have another tax question regarding overseas pension distribution. Pension is like an IRA or 401k, except I didn't receive a form like 1099-R. Tax was withheld. Should I create a 1099-R, TT has this option. Or should I just put them in 1040 and then claim foreign tax credit. The last option is what I have, but with the 1099-R option, I get more money back, plus there is an official record or paper trail for that money. Any comment or experience in dealing with this type of situation is greatly appreciated.

I've been in receipt of an overseas pension for 10 years and the first few years I created a substitute 1099-R with associated form 4852. However this is really aimed at US firms that haven't issued a 1099-R (on the form you have to explain what steps you've taken to obtain a 1099-R and the fields don't support a foreign address etc.) A few years back I heard that it is much simpler and acceptable to add it to line 21 on the 1040 as other income. The tax is identical whichever method you choose and the IRS don't seem to care as I've never been questioned on it whichever way I choose to report it.

 

[Fedup]

I've been in receipt of an overseas pension for 10 years and the first few years I created a substitute 1099-R with associated form 4852. However this is really aimed at US firms that haven't issued a 1099-R (on the form you have to explain what steps you've taken to obtain a 1099-R and the fields don't support a foreign address etc.) A few years back I heard that it is much simpler and acceptable to add it to line 21 on the 1040 as other income. The tax is identical whichever method you choose and the IRS don't seem to care as I've never been questioned on it whichever way I choose to report it.

That's where I put, line 21 of 1040. But where do you put the tax they withhold. It's different outcome if I report as 1099-R. I get a lot more tax back. But I thought, US government is not going to give me money that was withheld by UK government, I mean it's not fair for US government. So the most they can do is to give you foreign tax credit to ease some of the pain, and that's the step I took. I hope I'm wrong. I want to take the right path to give me more cash back. This is half of a lumpsum, not annuity payment.
I'm trying to research from the U.K. Expat forum but my googling must not very good.

 

[Alan]

That's where I put, line 21 of 1040. But where do you put the tax they withhold. It's different outcome if I report as 1099-R. I get a lot more tax back. But I thought, US government is not going to give me money that was withheld by UK government, I mean it's not fair for US government. So the most they can do is to give you foreign tax credit to offset some of the pain, and that's the step I took. I hope I'm wrong. I want to take the right path to give me more cash back. This is a lumpsump, or half of a lumpsum, not annuity payment.

The U.K. government should not be taking any tax if you are not resident in the UK, which has always been the case for me taking my UK pension. The US/UK double taxation treaty states which country has primary taxation of which stream of income depending on where you are resident.

The first month I received a pension tax was taken so I filed a form with the IRS who then informed the UK HMRC that I was a US tax payer and the tax was refunded in my next pension payment and my tax code changed to NT (no tax). See form 2002 I think.

https://www.gov.uk/government/publi...a-si-2002-number-2848-form-us-individual-2002

 

[Fedup]

The U.K. government should not be taking any tax if you are not resident in the UK, which has always been the case for me taking my UK pension. The US/UK double taxation treaty states which country has primary taxation of which stream of income depending on where you are resident.

The first month I received a pension tax was taken so I filed a form with the IRS who then informed the UK HMRC that I was a US tax payer and the tax was refunded in my next pension payment and my tax code changed to NT (no tax). See form 2002 I think.

https://www.gov.uk/government/publi...a-si-2002-number-2848-form-us-individual-2002

They did, they sent us a letter to say the money was made in UK and therefore they took out some tax. We also did fake some form with the IRS and they communicated with UK HRMC that we are currently a US tax payer and they still took some tax anyway.
I don't mind about the tax, I just want to know where to claim it on my tax. My husband and I think of it as donation to the U.K. for his PhD degree. He earned it there and didn't work in the U.K. after he moved to USA.

 

[Alan]

They did, they sent us a letter to say the money was made in UK and therefore they took out some tax. We also did fake some form with the IRS and they communicated with UK HRMC that we are currently a US tax payer and they still took some tax anyway.
I don't mind about the tax, I just want to know where to claim it on my tax. My husband and I think of it as donation to the U.K. for his PhD degree. He earned it there and didn't work in the U.K. after he moved to USA.

IRS form 1116 is for claiming foreign tax credits so you could try that, but the IRS may well consider that they are the primary tax authority for foreign pensions as per the tax treaty. If the money you were receiving from the U.K. was indeed earned income then that would be different. Does HMRC also take NI contributions or just income tax?

 

[Fedup]

IRS form 1116 is for claiming foreign tax credits so you could try that, but the IRS may well consider that they are the primary tax authority for foreign pensions as per the tax treaty. If the money you were receiving from the U.K. was indeed earned income then that would be different. Does HMRC also take NI contributions or just income tax?

It's like contribution to IRA in USA, you must have income to contribute. HMRC withheld just income tax on that amount we withdrew. But we paid NI separately for years to get UK SS pension.