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I closed out an annuity in Mar of 2017. I put a part of the…

I closed out an...

I closed out an annuity in Mar of 2017. I put a part of the disbursement into 2 other accounts jointly owned by my wife an me. The payment had 10% taken for FIT and 3% for state income tax. I was thinking of averaging the payout over 7 years if possible to redeem a part of that disbursement, if possible. Also can the purchase of the new plans be deducted from the total pay out to lessen the tax burden? I also have a few other questions. And may I copy and paste the info into word so I can remember.

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

Can I deduct any losses to the previous plan?

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Answered in 1 hour by:
3/13/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,340
Experience: Taxes, Immigration, Labor Relations
Verified

Unfortunately these options may not be used in your situation - income averaging is ONLY allowed for those in farming or fishing business.

For your annuity distribution - we need to verify on form 1099R

- reporting code in box 7

- and amounts in boxed 1 and 2a.

- your age

The later amount from box 2a will be added to your other taxable income.

You will calculate your tax liability based on TOTAL income, filing status deductions, etc

and that amounts you had withheld for federal and state taxes - will be credited toward your tax liability.

.

Regarding losses - I will need a little more information for proper determination.

Please elaborate.

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Customer reply replied 5 months ago
Hi Lev, I only gave you a 3 star rating because what I read about averaging said certain people who are retired can use this to reduce the tax burden, which is exactly what I an lookin to do. I read the whole report today. Send a secure ink and I will give you the info required. I have been using Free tax for a couple of years, Tax act for several years and Turbo tax for the longest. The reason I changed from the first 2 is because they became to difficult to enter data and they started charging to keep the return on file. I will fill out my own form I just need some direction on how to cut my taxes. I know I made a mistake by closing the annuity, I felt they were not doing a good job watching their investments. Also I am angry with the agent I dealt with, he seemed like he did not want to be bothered. FY!, I lost $15K at least in 2008-2009. not happy. After our next report I will more than likely take you up to for or more stars. I know I did not give you enough info at first contact. You responded quickly that Sir is a 5 star. Thanks, Bob
Customer reply replied 5 months ago
I am trying to keep the cost as low as possible, the way I moved the money was to protect my wife's retirement. I want her to have as much as she can.

Indeed - we do not have enough information for determination and indeed there is a qualified lump-sum distribution received in 2017 which allows the the 10-year tax option.
You pay the tax only once, for the year you receive the distribution, not over the next 10 years. The separate tax is added to the regular tax figured on your other income.

The participant must have been born before January 2, 1936 to be eligible.

Let me know if that works for you.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,340
Experience: Taxes, Immigration, Labor Relations
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