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Lou
Lou, Tax Preparer
Category: Tax
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Experience:  25+ yrs Experience Personal Income Taxes - Former DM for H&R Block in California
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My mother (born July 1931) cashed out her annuity in 2008 (approximately

Customer Question

My mother (born July 1931) cashed out her annuity in 2008 (approximately $45,000). She also took the minimum distributions for the years 2004, 2005, 2006, and 2007 from that same annuity in 2008. She had 10% withheld for taxes. The IRS has forgiven any late payment and penalties on the the minimum distribution withdrawals since she was unaware that she was supposed to take the distribution. In 2008, she earned $3,997 in a pension and $13,070 in social security benefits. Her tax preparer says she owes an additional $9,000 in taxes for 2008. Is that possible?
Submitted: 5 years ago.
Category: Tax
Expert:  Lou replied 5 years ago.
Hello and thank you for contacting JustAnswer. We appreciate the opportunity to be of service to you.

The tax preparer appears to be right.

She should have received two 1099R's one for the $3,997 & the other for the $45,000.

I would assume based upon her age that a "7" is in box 7 (if not let me know).

As a result $11,110 of her social security would be subject to income tax..

Her taxable income after deducting her standard deduction and personal allowance would be approx $47,000.

If she has no other credits or deductions the tax on that amount would be a[approx. $8,100. There also could be some state income tax liability as well.

If you have further questions on this topic please let me know.

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Lou
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25+ yrs Experience Personal Income Taxes - Former DM for H&R Block in California