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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3004
Experience:  IRS licensed Enrolled Agent and tax instructor
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I am trustee elderly hospitalized Mother's trust. I

Customer Question

I am trustee for my elderly hospitalized Mother's trust.
I neglected to process a 2015 RMD (~$1400). Today I distributed her entire IRA.
Is there any way to avoid paying a penalty on the late 2015 RMD?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

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

Yes, you can request a penalty waiver if you have a valid reason, a reasonable cause for failing to take the distribution and you took actions to correct it. If this is your first offense, IRS will most likely wave the penalty.

Here's what you have to do. You can also find it instructions for 5329 form.

1. Complete lines 52 and 53 as instructed.

2. Enter “RC” and the amount you want waived in parentheses on the dotted line next to line 54. Subtract this amount from the total shortfall you figured without regard to the waiver, and enter the result on line 54.

3. Complete line 55 as instructed. You must pay any tax due that is reported on line 55.

The IRS will review the information you provide and decide whether to grant your request for a waiver.

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

Expert:  emc011075 replied 1 year ago.

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

Customer: replied 1 year ago.
Can I do this within TurboTax? I have distributed the entire IRA as of today. Is there a way I can have this distribution show on my 2015 return?
Customer: replied 1 year ago.
There is no tax ... The total net income-deductions is negative. My mother is 94, has very little income, and is hospitalized.
Expert:  emc011075 replied 1 year ago.

If you can do it in Turbo Tax? Maybe. I do not use Turbo tax and most softwares used by tax professionals will allow you to do certain overrides. Turbo tax, like other retail softwares are less flexible when it comes to special situations. You have to try to figure it out or contact TT help.

You cannot show your 2016 distribution on your 2016 tax return. It will be claimed next year. Just because there's no tax it doesn't automatically mean that there's no penalty. The penalty is added at the very end, after all deductions and credits.

Customer: replied 1 year ago.
You meant to say 2015 return, didn't you? I was asking if I could simply request to include the
distribution I have now taken in 2016 as a (belated) distribution taken in 2015 on my 2015 tax return.
Expert:  emc011075 replied 1 year ago.

Yes, I ma sorry. You always claim income (distribution) in the year you received the money and deduction in the year you paid the expenses. There are some exception to the rule but those apply only to special situations like adoption or business start up.

Expert:  emc011075 replied 1 year ago.

Here's Turbo Tax customer support site:

Another option is to prepare and file the return on paper.

Expert:  emc011075 replied 1 year ago.

Gary, I see you offline now. If you found my answers helpful, a Positive Rating would be greatly appreciated. And if you need more help let me know. Thank you.