Hello and thank you for using Just Answer,You are correct in the assessment of your situation.
There are times when a correction can be made but they involve the institution making the mistakes. As you physically received the check you would have to report it as income.
This is going to require that you amend your return.
I wish I could say that the IRS would allow a correction on this,
Not the 10% but any penalty for the balance due, yes.
You can request they abate any penalty that is added because of the underpayment of tax
Your reason does not even have to be good for a onetime request
Taxpayers are allowed that if it has never been asked for in past
The IRS waives the 60-day rollover requirement automatically only if all of the following apply:
You can still ask them for a waiver.
In determining whether to grant a waiver, the IRS will consider all relevant facts and circumstances, including:
The broker is most likely going to advise that you seek a tax professional to ask for the waiver
I was hoping for lenience if I show it was in fact rolled over properly and never cashed, and then pay some kind of nominal penalty for having the funds available for that period exceeding 60 days -- 90 days in this case.
That is what the waiver request is for
The check was not given to the institution so the rollover was not done correctly but if you have a reason (like I listed above) then they may allow it.
check cut 11/23/2012
Then you need to act fast and request the waivver to extend the 60 days
If the iRS grants it then you will not have any penalty and will not need to amend to include in your income
will do. I suppose it only makes sense to continue with depositing the full, untaxed (nothing withheld) amount today into Brokerage B ?
If they will accept it yes
That will assist in showing that you really never had the funds
and that you were not attempting to use the funds for reasons othe rthan rollover
Thing is -- I don't have $40k to pay in taxes/penalties right now, and the last thing I want is to dip into this again and get penalized 2x just to pay the taxes!
The check may need to be reissued (depending on date) so call the broker today
explain that ou are going to request the waiver based on ...... and if the will accept the check then that is good
But if I get it reissued it may have the appearance of impropriety, no?
I guess that's why I wanted proof that this check never became cash in hand.
Not really, what if you had never received it? What if the check had been lost in the mail? What if? There are many reasons for checks being reissued.
Well... if it gets reissued, it WILL become cash in hand in preparation for taxes, and IRS will not know that's why I did it.
Will any accountant do for this type of request, or do I need a tax professional to prepare this for me?
headed out; I'll return later this afternoon.
If your accountant does not know how to make the request for waiver Revenue Procedure 2013-4, Appendix A, contains a sample letter ruling request format. Appendix B contains a checklist of information that you should submit with ruling requests made under the revenue procedure.
Sorry for the delay before. I lost my connection.
The link above should be all your professional needs to prepare the request.
Your positive rating is always thanks enough.