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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15182
Experience:  15years with H & R Block. Divisional leader, Instructor
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Tax Law Question?

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Tax Law Question?


Hi and welcome to Just Answer!
Please post your question.


On my 2010 tax return I had cashed an old IRA for $7000 and entered it as a ROLLOVER with no tax due. My rollover is based on my paying into my employee retirement account $15,400. for the year. IRS wants me to pay $1800. additional tax based on this additional retirement income. Do I staand a chance and need to file for a tax court date or just pay as my filing deadline is this coming Monday.

Hello and thank you for using Just Answer,
The IRA you cashed in would have needed to be placed in a qualified account within 60 days the distribution.

You can roll over your IRA into a qualified retirement plan (for example, a 401(k) plan), assuming the retirement plan has language allowing it to accept this type of rollover. The rollover requirements, especially for the time to complete, must be met.
The fact that you contributed to the retirement account would fall under deferred compensation. This means that the amounts you contributed, if made with pretaxed amounts, already received a tax benefit.
In short, if you withdrew the IRA, made contributions to your employer account with pretaxed money and did not pay tax on the amounts contributed,or did not actually rollover the exact amount from the IRA into the employee account within 60 days of the distribution then you should have included the distribution with your income for the year of the withdrawal.
Please let me know if you need more clarification and I thank you in advance for a positive rating.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15182
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 2 other Tax Specialists are ready to help you
Thank you for the rating and I wish you the best.