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My H received several 1099's that reflect that the amounts…

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Hi! My H received several...
Hi! My H received several 1099's that reflect that the amounts he received from a deferred compensation plan, afinal withdrawal loan from his pension were rolled over into an IRA. He also received a variable supplement check (he was taxed on that $12k).Recently a tax preparer has suggested that this has to be tallied up to find out if he paid enough taxes. (even the rollovers have to be added to his income) or...his total adjusted gross income was $238K or so. We think that the preparer has made many mistakes by adding some or all of the 1099s to his income when many were rollovers to an IRA.(1) he was already taxed on many of the items the preparer added to his adjust gross income(a) 1099R Monthly retirement income received in 2017 --- $36,600 taxed $4,071.24 (he worked part of the year as a retired member) and received salary in the amount of $105,575.84 on a W-2 Wage Tax Statement(b) he received $60,000.00 (VSF DrOp) was taxed $12,000.00 K (ths was not rolled over but deposted into his account)(2) some of the items were rolled into qualified plans and are not subject to taxation.(a) Final Withdrawal Loan - approximately $89,000.00k(b) Deferred compensation $83,528.82 (total distribution) but was rolled over into an IRA.(3) He took a 25,562 IRA distribution in 2017 but remembers paying tax on part of the distrubtion.THE TAX PREPARER has included on line 16a 281,041 and for 16b 107,348.He has come to the conclusion that his adjusted gross income is 238,807I just can see how that is right. One, most of the money was rolled over into an IRA and (2) he paid taxes on a lot of the money so adding this money back into his income is going to create a double taxation situation.
He also received a variable supplement check for $48,000.00 whch was taxed $12K He deposited the check in his account. Would he ned to enter this as income if he was already taxed on it by the NYPD? If he doesn't enter as income would this need to be entered on Line 16B?FYI he is filing married but filing separately.Can you please help us sort out this mess. Thanks
Submitted: 4 months ago.Category: Finance
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Customer reply replied 4 months ago
Correction: I just can't see how the tax preparer could be right...can you help us sort this out?
Answered in 23 minutes by:
3/27/2018
Financial Professional: emc011075, Tax adviser replied 4 months ago
emc011075
emc011075, Tax adviser
Category: Finance
Satisfied Customers: 3,983
Experience: IRS licensed Enrolled Agent and tax instructor
Verified

Hi. My name is ***** ***** I will be happy to help you.

I would have to see the tax return to determine if it was right or not.

The final tax amount is calculated on the tax return. Any withholdings are estimated payments that will be credited against the final tax liability at the end of the return, on line 64.

To determine actual tax liability you have to report ALL of your income subject to income tax. Total distributions are reported on line 15/16a, taxable amount is reported on line 15/16b. Amounts on 15/16a are not included in adjusted gross income.

Your final tax liability is reduced by withholdings made during the year to determine final refund or balance due.

Regarding rollovers, only amounts rolled into another retirement accounts within 60 days or trustee to trustee rollovers are treated as tax free. Also, there's one rollover per year rule between IRAs. The restriction does not apply to rollovers from employer's plans.

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Customer reply replied 4 months ago
Hi Eva!Can I send you all of the documents include the 1099s? My gut is something just isn't right b/c if he is taxed on items that were rolled over from his employer to his IRA now and then withdraws from the IRA into another account he'll be taxed again.. Know what I mean?I would greatly appreciate any and all help regarding this matter.BTW, the return I would send you lists him as single -- he is actually married filing separately.Please let me know if I can just send those over for your thoughts.
Customer reply replied 4 months ago
This is further to my questions above -- do distributions include rollovers from employer plan to IRA or are distributions money received (i.e., check from the employer) that is deposited into the bank?
Financial Professional: emc011075, Tax adviser replied 4 months ago

This website is not secure for personal information, it would not be a good idea. Rollovers are not included in taxable income, line 16b which means the amount is not taxed. It will be taxed when distributed later. The withholding will be credited against the remaining tax liability on his tax return and if he paid more than he should he will get a refund.

However, only the amount deposited into a new account is treated as rollover. Any withholding, is treated as distribution. For instance, he took 10K distribution, 2K was withheld for taxes and he rollover over the remaining 8K within 60 days. 8k is treated as rollower and 2k is treated as distribution.

The 2K will be used against his current year tax liability. For instance, if his taxable income is 250K and his tax is 25K, his tax liability will be reduced to 23K. The amount rolled over is not included in taxable income and therefore not taxed.

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Customer reply replied 4 months ago
Thanks for getting back to me. I would not be sending any personal information over -- everything will be cut out and/or redacted. Can I send it to you. Please?
Financial Professional: emc011075, Tax adviser replied 4 months ago

Ok

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Customer reply replied 4 months ago
okay, thanks. I will have to do it tomorrow. I just want to make sure I send you the right 1040. Thanks.
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