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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10126
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My name is***** was in the process of getting a divorce

Customer Question

My name is***** was in the process of getting a divorce and my husband agreed on the money I was asking for. He had to cash in his 2 IRA. His investment advisor told him if he turns it over to me I would only have to pay 20 percent verses 35 percent he would have to pay. Because we have an adult daughter I was trying to be fair. After all was said and done I went to cash IRA and found out that my rate was 30 percent. Do I have any recourse against investment center for deceiving me.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.
Hi,So sorry this s working out this way..Bot***** *****ne here is that the IRA diistribution is added to your taxable income ... so if you are in, say, the 25, 28 or 35% bracket based on your OTHER income on your return for your household... the IRA distribution is taxed at that rate (because it's income on top of whatever your other income for that year IS. ....Now, be sure that you're not confusing the WITHHOLDING with whatever the tax ends up BEING on that extra income for the tax year you pull it out..The withholding (if any was done) will show up on the 1099-R that you'll get in January (for the purpose of doing your taxes next April) ... ( just like the withholding done on a W-2) ... and if the withholding was enough to cover the taxes that the distribution CREATED, (all other things being equal) you'll not owe any additional taxes....If the wiithnholding was MORE than your actual tax rate, then (all other things being equal) you'll get a refund..If the withholding was LESS than your actual tax rate on that distribution, you could owe a little more BECAUSE OF that distribution.. And on the recouse against the Investmentt Center, you can certainly ask IRS for abatement of any penalties under the "reasonable cause" waiver of penalties (reasonable cause being that you relied on the advice of a professional) ... but you'll still owe the taxes based on the amount of the distribution. . Hope this helps.Lane .If this HAS helped, I would appreciate a positive rating (using the stars or smiley faces on your screen)… That’s the ONLY WAY I'm credited for the work here. … However, if you need clarification, or want to discuss this issue further, be sure to come back here, so you won’t have to pay for an additional question.
Customer: replied 1 year ago.
The taxes were not the issue. The issue was the investment center out right lied to me so I could make provisions for the remaining settlement money that I am short and also not paid when the divorce before the divorce was final .
Customer: replied 1 year ago.
In other words can I sue investment center for the deception.
Customer: replied 1 year ago.
I never got an answer to my follow up questions
Expert:  Lane replied 1 year ago.
So sorry, I just got the alert here.Yes, you can sue them.You will, of course have to prove that they lied .. that they did this with intent..Otherwise you cansue them under the negligence tort of detrimental reliance ... very similar to malpractice for an attorney.They likely have insurance called "errors and ommissions." You should name their carrier as well I hope this helpsLane.If this HAS helped, I would appreciate a positive rating (using the stars or smiley faces on your screen)… That’s the ONLY WAY I'm credited for the work here.

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