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A Taxpayer filed for divorce & as part of the settlement was…

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A Taxpayer filed for...

A Taxpayer filed for divorce & as part of the settlement was granted a IRA account. She subsequently used the account to make down payment on a house for herself & the children. Does she owe any taxes on the amount she used for the house?

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

She is under 59 and in her earley 40s.

Submitted: 23 days ago.Category: Tax
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3/29/2018
Tax Professional: Lev, Tax Advisor replied 23 days ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,687
Experience: Taxes, Immigration, Labor Relations
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Does she owe any taxes on the amount she used for the house?

There is no tax liability on the "use" of the money...

But distribution from IRA account indeed is taxable.

There must be reporting form 1099R - and box 2a should provide with the taxable amount.

That taxable distribution is added to other taxable income.

Generally, early withdrawal from an Individual Retirement Account (IRA) prior to age 59½ is subject to being included in gross income plus a 10 percent additional tax penalty.

There are exceptions to the 10 percent penalty - specifically qualified first-time homebuyers, may exclude up to $10,000 from the penalty.

Let me know if you need any help with reporting.

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Tax Professional: Lev, Tax Advisor replied 18 days ago

I appreciate if you take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.

If you still have any doubts, need clarification - please be sure to ask.

I am here to help you with all Social Security / Tax related issues

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