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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 14037
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I establish Roth IRA over 10 years ago. Currently I am 45 years

Resolved Question:

I establish Roth IRA over 10 years ago. Currently I am 45 years old.
I contribute yearly to Roth IRA. Minimum $5500.00
For tax purposes, I am supposed to attach form report to return.
Something 86..
At age 72 when I withdrawal from ROTH IRA, how will calculate gains.
First in, last in? Confused.
Submitted: 1 year ago.
Category: Finance
Expert:  Megan C replied 1 year ago.
Hello, Emma.

The form you are interested in is form 8606 and you can find it, HERE

When you are 72 and withdrawing from your Roth IRA you do not need to worry about gains because all your withdrawals are tax free once you are full retirement age. So, no taxes on this.

You don't need to worry about gains and losses on assets in a retirement account. Only when you withdraw the money are you taxed - there is no capital gain consideration there. In the case of Roth, there is no tax whatsoever if you withdraw after full retirement age.

Thanks again for using JustAnswer.com - please let me know if you need anything additional. Once you have the information you need, please rate my response as "excellent" so that I may receive credit for assisting you today. Thanks again!
Customer: replied 1 year ago.


I use form 8606 for ?


 


 


I will pay taxes on withdraws at the age of 72 years,


How will I calculate basis.

Expert:  Megan C replied 1 year ago.
Form 8606 reports your nondeductible contribution to the IRS.

You don't need to worry about basis. There's no tax at age 72 with a Roth.

You never have to calculate basis with a retirement account.

Please let me know if you need anything else. If not, please rate as excellent so that I may receive credit for assisting you today. Thanks again.
Customer: replied 1 year ago.
At the age of 72 I will withdrawal
From my retirement account and pay
Ordinary income tax on withdrawal.

Regular Ira I don't need to keep track
Of basis, either.

If my income is over $150,000
I can't put money to Roth IRA.
Need to report non-deductible amount on form
8606. What line?
Expert:  Megan C replied 1 year ago.
Thank you for your follow up. Form 8606 is not required for contributions to Roth, just nondeductible contributions to a normal retirement account. There is no form to fill out for Roth contributions. I should have spelled that out for you.

For a regular IRA you do NOT keep track of basis. This is because when you take money out, you are taxed on the whole amount as ordinary income. There's no capital gain or loss.

Thanks again for using JustAnswer.com and have a great night. Please rate my response as "excellent' so that I may receive credit for assisting you today.
Customer: replied 1 year ago.
What $$$ amount gross income
One no longer qualified to contribute to Roth IRA.
Over $150k?
If one does and it's dissallowed what happens?
Expert:  Megan C replied 1 year ago.

Thank you for your follow up. What income limit applies to you depends on your filing status. You can CLICK HERE to see which limit applies to you

If you put the funds in your Roth IRA and were not supposed to based on the income limit, you would be hit with the excess contributions tax. The tax is 6% and it is assessed on the funds you have in the Roth IRA every year that they remain in there. You can see more details, HERE.

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today.

Customer: replied 1 year ago.
Please explain, since Roth IRA contribution, $5500.00 is not reported any where
On my return. And my income agi, example over
189,000. Meaning, I could contribute to Roth.
How would iRS know this.
I didn't know about limits.
I am confused now. No were on return I reported
Contribution to Roth.
It's not found on 1040 ?
Expert:  Megan C replied 1 year ago.

Thank you for your follow up. You do not report Roth contributions anywhere on your tax return, but if you go over the income limit you must take the excess contributions out to avoid the tax.

The Roth IRA custodian sends reporting to the IRS of your contributions, which is how they know. It is not self reported.

You can view Publication 590 for more details.


Thanks again for using JustAnswer.com and have a great night. Please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today.

Customer: replied 1 year ago.
How do I take excess out.
Incurred 10% penalties.
Income over 180,000 joint return. Can't add to Roth?
Correct. Regular Ira either?
Expert:  Megan C replied 1 year ago.

Thank you for your question, and thanks for using JustAnswer.com

To take your excess contribution out, you will contact your IRA custodian and get the forms from them. They will walk you through how to handle this.


You can still contribute to a regular IRA, it's just that you cannot contribute to a Roth IRA.

Thanks again for using JustAnswer.com and please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today.

Customer: replied 1 year ago.
Ira contribution has limit too?
I though caps at 180,000
Expert:  Megan C replied 1 year ago.
Thank you for your follow up. The limit that you are speaking about is the income limit where you can take a deduction if you or your spouse is covered by a plan at work. However, you can make nondeductible contributions to the IRA at any income limit. You would report nondeductible contributions to regular IRAs on form 8606.

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today.

Thanks again for being a valued JustAnswer.com customer.
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 14037
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 4 other Finance Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thank you for your positive rating and generous bonus. Please come back and visit MyVirtualCPA any time you need a tax, finance, or social security question answered. IT was a pleasure working with you today.
Expert:  Megan C replied 1 year ago.
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer
Customer: replied 10 months ago.


I can report to regular IRA with AGI 185K or higher if my husband is covered by Pension plan at work. I will deduct non deductible contribution on form 8606? will not get tax benefit from this yes?


But will pay for taxes that year. And therefor when withdraw at age 59 1/2 distribution will be tax free.


Sorry, for my lack of knowledge/

Expert:  Megan C replied 10 months ago.
Thanks for your follow up. That is correct, if your AGI is too high and your spouse is covered by a plan at work, your contributions will be non-deductible, but you will be able to draw them out tax free once you reach retirement age.

Please let me know if you need anything additional. If not, please rate my response as "excellent" so that I may receive further credit for assisting you today.
Customer: replied 10 months ago.

 


My combine AGI higher over 185K, I can’t contribute to Roth.


Can contribute to non-deductable IRA. need to keep track of contribution on form 8606


In order to withdrawal IRA tax free at age 70 ½ correct.


What if my accountant never keep track and never reported Ira on form 8606


What happens now? How do I proof to IRS my non-deductable contributions?


2nd question, if I contribute to Annuity account. $$ post tax. On the withdrawal I will be taxed at ORDINARY income Level.


Debating between contributing to non-deductible IRA and Annuity.


Wiser choice.


Thank you in advance.

Expert:  Megan C replied 10 months ago.
Let me research this, Emma and I will get back with you. Thanks.
Customer: replied 10 months ago.
Are you still researching.
Expert:  Megan C replied 10 months ago.
Yes, it may take me a while. I'm not completely sure what to do if you haven't been tracking this on the proper form. Thanks.
Customer: replied 10 months ago.
No problem will Waite for you..
You explain so well. Emma
Expert:  Megan C replied 10 months ago.
Thanks, Emma.
Customer: replied 10 months ago.

IT is my responsibility to keep track of form 8606. Running balance. Non deductable IRA. Yearly contribution 5500.00.


AT age 70 ½ will be tax deductible only if reported on form 8606.


2nd question annuity on withdrawal at age 70 ½ I will always. pay taxes.

Expert:  Megan C replied 10 months ago.
Emma,

Yes, it is your responsibility to track form 8606. If this had not been done, you will need to go back and do it. If you can't go back and fix your returns to do this, then you cannot take the distributions tax free...you will have to pay tax on them.

When you buy an annuity with after tax money, then when you draw money out the only money you are taxed on is your gain. You're not taxed on the amount of basis you have in the annuity.

Whether you do a nondeductible IRA or annuity is up to you. I don't see where one is really better than the other.

Thanks, XXXXX XXXXX rate this response as "excellent" so that I may receive credit for assisting you further. I do not get credit, unless you rate. Thanks again.
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 14037
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 4 other Finance Specialists are ready to help you
Customer: replied 10 months ago.

 


Brokerage account will send me 1099 or some form when I will withdrawal Roth IRA.


I will have to proof to IRS this was qualified allowed Roth IRA. Meaning one year, I contributed to ROTH IRA and it was over my AGI limit.


Since ROTH IRA deduction at age 70 ½ is tax free event. DO I need to report anything on return? Thank you in advance

Expert:  Megan C replied 10 months ago.
Yes, the brokerage firm will send you a 1099 form when you withdraw from the IRA. You don't have to prove anything to the IRS unless they ask you to.

When you take a Roth distribution after age 70.5 there's nothing to put on your return because essentially there's no reportable income.

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today.
Expert:  Megan C replied 10 months ago.
Yes, the brokerage firm will send you a 1099 form when you withdraw from the IRA. You don't have to prove anything to the IRS unless they ask you to.

When you take a Roth distribution after age 70.5 there's nothing to put on your return because essentially there's no reportable income.

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today.
Customer: replied 10 months ago.

 


On conversion from IRA to ROTH, approximately 10 years ago.


I Had small AGI 40K , was I suppose to file form 8606?


What proof will I have that conversion with proper AGI limits were done correctly?


I forgot what year I converted.


2nd question: FORM 8606 asks to calculate basis of rational IRA. I am confused.


Prior e-mail you instructed to me I don’t need to keep track of basis.


Please explain.


Plus starting 2014 I will start contribution to non-deducible IRA

Expert:  Megan C replied 10 months ago.
No, you would not file form 8606 upon conversion from traditional to Roth.

You don't need anything to prove that the conversion was done correctly.

It is your responsibility to track on form 8606.

When you contribute to the non-deductible IRA, you will need to track the funds you put in there.

Hope this helps.

Thanks

Megan
Customer: replied 10 months ago.


FORM 8606 asks to calculate basis of traditional IRA. I am confused.


Prior e-mail you instructed to me I don’t need to keep track of basis.


Please explain.


Plus starting 2014 I will start contribution to non-deducible IRA.


 


Thanks for your patience. Greatly appreciate your help


 

Expert:  Megan C replied 10 months ago.
Thanks for that.

If you have non-deductible contributions, you must track that. I have stated that. You do not have to track your basis if the contributions are deductible.

Please let me know if you need further assistance. Thanks again!
Customer: replied 10 months ago.

 


Please explain Roth IRA and Non-deductable IRA, on withdrawal retirement I don’t pay any TAXES CORRECT? SO what’s the difference? Such a fuss to report it correctly.


Why will I pay 6 % penalty on contribution to Roth iRA over AGI limit. 180K


Before year end I should transfer ROTH IRA amount to non-deductable IRA not to worry.


2nd I am looking at form 8606 . Form request for me to specify IRA Basis. Please explain WHY. HELP.

Customer: replied 10 months ago.

 


Will received 1099 from brokerage account even when I reach age 70 1/2 and withdrawal will be from ROTH and Non-Deductable IRA.


1099 Brokerage statement will be issued to me.


WHY I am not paying income tax on the withdrawal. Record keeping.

Expert:  Megan C replied 10 months ago.
Yes, you will receive a 1099 from the brokerage when you reach 70 1/2 and withdraw.

If you have a Roth account, you are not paying income tax because Roth distributions are not taxable.

You can recategorize your Roth to a nondeductible IRA to avoid any penalties, yes.

The difference between the nondeductible IRA and Roth IRA is that earnings are taxable under the nondeductible IRA, but the original money you put in it is not. Under a Roth the principal PLUS the earnings is tax free. So, everything is tax free with a Roth and only a portion with traditional non deductible.

Hope this helps

Thanks

Megan
Customer: replied 10 months ago.

that makes sense. Thank you.

Customer: replied 10 months ago.

My brokerage firm will keep track of basis. NOT? Cumulative basis.


Earliest I can withdrawl would be 70 1/2

Expert:  Megan C replied 10 months ago.
Your brokerage firm should be able to track your basis, yes.

No, age 70 1/2 is the latest you can start withdrawals. You can start any time after age 59.5. But, you MUST start taking withdrawals prior to age 70.5

Thanks!

Megan
Customer: replied 10 months ago.

Megan, would like to work with you.

New question, how do I deduct car expense. Meaning use to deduct milage only. Now will be purchasing a car please list how to deduct actual car expense what form. Step by step

Customer: replied 10 months ago.

 


Megan, would like to work with you.


New question, how do I deduct car expense. Meaning use to deduct milage only. Now will be purchasing a car please list how to deduct actual car expense what form. Step by step

Expert:  Megan C replied 10 months ago.
Okay, it's my pleasure to work with you some more. Please don't forget to rate this response as it is a new question. This is the only way that I get credit for my time spent assisting you.

If you are only deducting mileage, you do not need to file form 4562. All you do is take your mileage, multiply it by the allowed rate and put that on line 9. Then, on part IV of schedule C fill it out. That piece is self explanatory.

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today.
Customer: replied 10 months ago.

 


I don’t report income on Schedule C, I report income on schedule E.


Car milage I would list on 2nd page 4562


Previously, I used actual mileage system, now would like to lease an automobile.


Deducted mileage not gas or parking. Just business mileage.


Please guide me how to write off a car lease. FORM PLEASE.

Expert:  Megan C replied 10 months ago.
Thanks, Emma

You just put the amount on line 6 of schedule e...that should take care of your expense. There's no special form for a leased vehicle. You just use this line if you use standard mileage rate.

Please let me know if you need anything additional. Thanks again for using JustAnswer.com, and please don't forget to rate as "excellent" so that I may receive credit for assisting you today.
Customer: replied 10 months ago.

 


Lease a vehicle you don’t need to put additional support data.


Where do I keep records that lease cost is 60 % used for business. Remainder personal. Don’t I need to show usage?


 


If I choice to use actual cost I must own the car. I would depreciate a car probably 5 years. Plus actual cost repairs and probably gas?

Expert:  Megan C replied 10 months ago.
You would place the amounts still on form 4562 even if you lease. You can also claim actual expenses on the lease, if you wanted to. Yes, you could deduct both gas and repairs.

Thanks again for your reply

Megan
Customer: replied 10 months ago.

 


Please explain if I lease a car for business.


List what I can deduct. Monthly lease fee percentage used for business,


actual repairs and gas, a % used for business. Please be more specific


Report on FORM 4562 2nd page.


Then carry amount to schedule E.

Expert:  Megan C replied 10 months ago.
Yes, all that which you said is correct. You can deduct business use % of the lease payment, actual repairs, gas, maintenance, etc. You carry to form 4562 just like you do for your owned car and carry the amount to schedule e.

Thanks

Megan
Customer: replied 10 months ago.


I am confused. What is the difference if I owned the car or not.


 


I thought I could use actual cost, repairs, gas etc if I own the car


NOT Lease it

Expert:  Megan C replied 10 months ago.
You can use actual expense if you own or lease. There is no difference between owning the car or not. When you own it, you depreciate the car. When you lease, you write off the lease payments.

Thanks!

Megan
Customer: replied 10 months ago.


one can use milage if they own a vehicle.

Expert:  Megan C replied 10 months ago.
You can use mileage or actual expense, whichever is better for you. You can't write off actual expense and mileage.

If you use mileage, handle the leased car the same as the owned vehicle...same forms and everything.

Thanks, Emma. Please let me know if you need anything additional.

Megan
Customer: replied 10 months ago.


If I use mileage, I can add business portion of the lease expense to the overall cost. Meaning add mileage cost plus lease cost. PLUS GAS. and Maintenance.

Expert:  Megan C replied 10 months ago.
No, you can use mileage or actual expenses, but not both. You have to choose one or the other.

Thanks, Emma....let me know if you need anything else.

Also, please don't forget to rate, so that I may receive credit for this additional question. Thanks again.
Customer: replied 10 months ago.


If I lease the car, I will be able to add insurance cost as well.


Plus lease cost, plus gas, repairs and insurance. Allocated by percentage use of the business.


How do I keep records of business use.


Tedious. I estimate.

Customer: replied 10 months ago.


How do I open a new question and have you assist me .

Expert:  Megan C replied 10 months ago.
You can go to this link: http://www.justanswer.com/finance/expert-myvirtualcpa/ and enter the new question below my name.

Thanks!

Megan
Customer: replied 10 months ago.

If I lease the car, I will be able to add insurance cost as well.


Plus lease cost, plus gas, repairs and insurance. Allocated by percentage use of the business.


How do I keep records of business use.


Tedious. I estimate.

Expert:  Megan C replied 10 months ago.
Yes, if you lease you can add the cost of insurance.

Business use is kept through a mileage log. You must keep track of all miles - which ones are personal, and which ones are for business. So, it is tedious, yes.

Please let me know if you need anything else. If not, please rate this response positively so that I may receive credit for assisting you today.
Customer: replied 10 months ago.


Assessed Value on taxes example 452,100


Building 375,000


Tax assessors value of building and land $826600


 


DO I add improvement cost to 375000 and renovation cost 45000


Adding building cost to $420000


 


I think in the past I made a mistake I would add total cost of purchase plus renovation and closing cost. Add allocate 30 % to land and 70% to building. I have been doing this for 10 years. Would my prior depreciation would be disallowed.


 

Expert:  Megan C replied 10 months ago.
Emma,

What you were doing is correct - add total cost of purchase plus renovation/closing costs and allocating 30% to land and 70% to building. Your assessed value has nothing to do with your depreciation calculation.

Also, please make sure you rate me positively again, as that's the only way I receive credit for continuing to assist. Thanks!
Customer: replied 10 months ago.


Where can I see this in publication. That 70% ok for building and 30 % ok for land.


my friend insist, I need to use appraised value or tax assess value in the past to calculate break downs.


 


I am confused.


 


I simple added purchase price plus renovation cost plus closing cost points.


Example total cost $18500 - $129500 applied to building


$56000 to land.


I depreciated $129500 for 27.5 years.


What if I deprecatied the points not amortized. 25 years.


Big problem.

Expert:  Megan C replied 10 months ago.
Emma,

You don't have a big problem. What you are doing is okay. I do not have a publication that specifies that the 70/30 split is okay.

You've done everything right, so there are no worries.

Please let me know if you need anything else. If not, please don't forget to rate positively so that I can get credit for further assisting.
Customer: replied 10 months ago.


I depreciated the points not apportized them 25 years. big issue.


 


IRS agent can disallow deprecation.


WHat would be there basis.


 


I will be listing a property for sale. Rental property. Need to calculate my basis

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