How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Megan C Your Own Question

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 14426
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
23669918
Type Your Tax Question Here...
Megan C is online now
A new question is answered every 9 seconds

In 2011 I rolled over $41,000 from a regular IRA to a Roth

Resolved Question:

In 2011 I rolled over $41,000 from a regular IRA to a Roth IRA. At that time I paid the taxes on it. When it was time to do my income tax... I received a 1099 for that money which I had to claim as income. I never withdrew this money... it was just rolled over. This brought me into a higher tax bracket as I had to claim as income. How can this be possible.
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

How are you today?

MyVirtualCPA :

switching to q&A

Expert:  Megan C replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Megan C replied 1 year ago.
Judy,

Sorry to hear about your troubles. When you transfer funds from a traditional IRA to a Roth IRA, that amount is taxed to you as ordinary income. This is because when you take funds out of a Roth IRA you will not have to pay taxes on it. So, later on in your retirement this will be tax free income to you.

Any time you are switching from a pre-tax qualified plan to a Roth plan, you will owe income tax on that fund. But, once you are retired and taking the funds out of the Roth plan there will be no tax.

Please let me know if any of this is unclear, or if you need further assistance. I'm truly sorry that you had to pay tax on this back in 2011. I wish I had better news for you....please don't shoot the messenger!

Thanks again for using JustAnswer.com and have a great day. 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.

Why did I have to pay tax twice. I paid when I transferred it over and then I had to claim as income. This doesn't make sense.

Expert:  Megan C replied 1 year ago.

Thanks for your follow up. I see you rated our service as "bad" - this penalizes me personally. Please don't rate me bad, simply because the answer is not satisfactory. I have an obligation to give you an honest answer, which I have given. Thanks for your kind understanding.

 

You should not pay tax twice.

When you placed funds into a traditional IRA, those are pre-tax contributions. You do not pay tax on that money initially.

When you transfer to a Roth IRA you do owe tax, because funds in a Roth account are post-tax, and not taxed when you take them out.

Please let me know if anything is unclear. Thanks again for using JustAnswer.com, and don't forget to rate my response as "Excellent" so that I may receive credit for assisting you today.

Customer: replied 1 year ago.

Why did I get a 1099 on this money that I already paid tax on. This was NOT income but I had to claim it as income... even though it went into the Roth.

Expert:  Megan C replied 1 year ago.
Judy,

I'm sorry for your situation. However, these negative ratings impact me personally. Please do not rate based on whether or not you like the answer, please rate based on the level of professional service that I have given.

Whenever you make a transfer of funds from a Traditional IRA to a Roth IRA, that is included as income in the year you made the transfer. This money is now in your Roth IRA and if you are over 59.5 you can take the funds out without any penalty or tax.

Are you saying that you have now withdrawn funds from the Roth IRA, and paid income tax when you took it out? Are you over the age of 59.5? If so, you should not have paid tax again when you took the funds out.

Please let me know what else I can do to assist you with this further. Thanks again for using justanswer.com and have a great day.
Customer: replied 1 year ago.

I don't think you are understanding my question or maybe I'm not explaining it right. I am very frustrated. I'm talking about 2011 when the money was transferred. I paid tax on it at time of transfer. Why did I get a 1099 for that amount which I had to claim as income when it was not income. It was just an IRA transaction.

Expert:  Megan C replied 1 year ago.
Thank you for your follow up.

I am confused because you should not be taxed twice. At the time of the transfer, taxes were withheld, and then when you file your tax return those withholdings will go towards your tax liability. You should not be paying tax two times on the same IRA transaction.

You should only pay tax once in 2011. You should not pay tax twice. On your 1099 it should show the amount that was withheld for tax, and that amount should be applied so that when you actually file the return you only have to pay tax if there wasn't enough withheld. Only one time should you be taxed on that transfer.

Does this make more sense? Please let me know if you need anything further, as I will stick with you until we get this resolved.
Customer: replied 1 year ago.

What you say makes sense. The problem I'm having is by claiming the 1099 on my income tax... (basically saying its income) it puts me in a higher tax bracket and I had to pay income tax. I am under the impression that I should only receive a 1099 when I withdraw this money which I did not. BTW... I was 65 at the time.

Expert:  Megan C replied 1 year ago.
Judy,

The problem is that this transaction is considered income by the IRS when you transfer from a traditional IRA to a Roth IRA. Did a financial advisor tell you to transfer these funds in this manner? IF so, I would find another advisor. At the age of 65, there is little to no benefit of transferring funds from a traditional IRA to a Roth IRA unless you expect to be in higher income tax brackets later on in your retirement.

You get a 1099 when you make this transfer, as it is considered income to the IRS. This is why you had to claim it on your income tax, and if you had other income you are correct you would have to pay more tax because of this transfer, as it pushed you into a higher bracket.

I'm sorry you find yourself in this situation, but the unfortunate truth is that you have to pay tax on that transfer just as if you took all the funds as income in that year. But, now, you can take money from that Roth account completely tax free.

Thanks again for using JustAnswer.com. Once satisfied with our communications, please rate as "excellent" so that I may receive credit for assisting you today.
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 14426
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 2 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.