Tag Archive for IRA

More Time To File, More Time To Procrastinate

Barry Fowler

Yes, this year taxpayers have an extra 3 days to get their taxes filed or to file for an extension. And whenever a procrastinator is given more time, they will inevitably stay true to their nature and put off filing until the very last minute.

This behavior is so well known to professional tax preparers and firms that the Wall Street Journal recently published an entire Read more

December 2015 Individual Due Dates

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December 1 – Time for Year-End Tax Planning

December is the month to take final actions that can affect your tax result for 2015. Taxpayers with substantial increases or decreases in income, changes in marital status or dependent status, and those who sold property during 2015 should call for a tax planning consultation appointment.

December 10 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during November, you are required to report them to your employer on IRS Form 4070 no later than December 10. Your employer is required to withhold Read more

Transfer of Cross-Border Pensions To Your RRSP

Larry Stolberg - 11-19-15

Below is a CRA confirmation of this.

Numerous immigrants to Canada or those residing in Canada but have worked for say U.S. employers have entitlements to U.S. pensions such as 401K plans and in some circumstances they have U.S. IRAs. The Income Tax Act has provisions to allow transfers including a claim for any U.S. withholding tax or for applicable early withdrawal penalties.

Examination of both the U.S. and Canadian tax provisions should be dealt with before any transfer takes place to ensure the rollover is available in Canada.


Have You Taken Your Required Minimum IRA Distribution?

Barry Fowler28

As year-end approaches, this is a good time to make sure you have taken your required minimum distribution (RMD) for 2015.

What is an RMD, you ask? The tax code does not allow IRA owners to keep funds in a traditional IRA indefinitely. Eventually, assets must be distributed and taxes paid. If there are no distributions, or if the distributions are not large enough, the IRA owner may have to pay a 50% penalty on the amount not distributed as required.

Generally, required distribution begins in the year the IRA owner attains the age of 70½. If 2015 is the year you reached 70½, you can avoid a penalty by taking that distribution no later than April 1, 2016. However, delaying the first distribution means you must take two distributions in 2016, one for 2015, when you reached age 70½, and one Read more

2015: Year End – Tax Planning For Individuals, What To Expect!

Manasa Nadig - 11-3-15

It’s November! I am always surprised by it’s arrival and the realization that it’s year-end tax planning time. The shortened day-light hours seem to make that certain without a doubt. So let’s roll-up our sleeves, get down to work and fine-tune possible last-minute strategies for lowering your 2015 tax bill.

Tax Brackets: Let’s take a quick look at the 2015 tax brackets, you will see from the table below that the top tax rate of 39.6% will apply to incomes over $$413,200 (single), $464,851 (married filing jointly and surviving spouse), $232,426 (married filing separately), and $439,000 (heads of households):

The 3.8% net investment income tax and/or the 0.9% Medicare surtax will also apply if you Read more

IRS Releases Pension Limits For 2016

Barry Fowler26

Saving for retirement is one of the most important things you should do. Even though retirement may seem far away now, that time will eventually arrive and you will want to be prepared for it with adequate savings. Contributing to tax-advantaged retirement plans while you are working is one of the best ways to build up a nest egg for your retirement years. That said, the tax law doesn’t allow unlimited annual contributions to these plans.

If you have been wondering how much you can contribute to your retirement plans in 2016, the IRS has released the inflation-adjusted limits for next year’s contributions. Since inflation has been low this past year (at least according to the government’s calculation), most limits won’t increase over what they were in 2015, but some of the AGI phaseout thresholds that work to reduce allowable contributions will change. Here’s a review of the 2016 numbers: Read more

Retirement Plan Distribution Pitfalls

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When an individual retires or leaves an employer’s service, the individual will be required to take a distribution from the employer’s retirement plan (if the employer had a plan). Depending on the employee’s age and the plan’s terms, a distribution may not be required immediately, but when it’s time to take the distribution there are a number of tax pitfalls that can create some very big tax headaches for the employee. This article will explore those hazards and discuss how to avoid them.

First and foremost, if the employee does not transfer or roll the distribution over into another employer’s qualified plan or an IRA, the entire taxable amount of the distribution will be included in the employee’s taxed income for the year of the distribution. In addition, if the employee is under 59-1/2 years of age at the time of the distribution, the employee Read more

Only One IRA Rollover Every 12 Months – Period!

Illustration of hand gesture that means do not forget or remember, a piece of rope tied around the index finger

Although this subject has been brought up before-and, yes, we are harping on the subject because of the profound tax consequences – this is a reminder that, beginning this year, individuals are only allowed one IRA rollover in any 12-month period (this includes SEP and Simple accounts, traditional and Roth IRAs). That is, 12 months must have elapsed from the date a rollover is completed before another rollover can be made. Failure to abide by this rule can be expensive. And the rule applies no matter how many IRAs an individual owns.

Example – Joe makes an IRA rollover on March 1, 2015. He cannot roll over another IRA distribution, without penalties, until March 2, 2016. Read more

Don’t Forget Your Retirement!

Time to retire clock

Even though retirement may be years away, and it may not be the most pressing issue on your mind these days, don’t forget your retirement contributions, especially with generous government incentives involved.

There are a variety of retirement plans available to small businesses that allow the employer and employee a tax-favored way to save for retirement. Contributions made by the owner on his or her own behalf and for employees can be tax-deductible. Furthermore, the earnings on the contributions grow tax-free until the money is distributed from the plan. Here are some retirement plan options:

Simplified Employee Pension Plan (SEP). This plan was designed to avoid the Read more

Planning Your RMD And IRA Distributions For 2015

illustration of retirement sign on sky background

We spend most of our lives saving for retirement by putting funds away in tax-advantaged ways. But many of us forget about planning the withdrawals so that they are tax advantaged as well.

Although there are exceptions, retirement funds generally cannot be withdrawn until we are age 59.5. If taken out sooner there is a 10% penalty that applies in most cases (in addition there may be a state penalty).

A large number of taxpayers do not take distributions until they are forced to at age 70.5, not realizing they might benefit tax wise by taking money out sooner. For example, if you are in a low or zero tax-bracket this year, you can take a certain amount out with no or Read more

Planning Your IRA Withdrawal?

Retire word with clock image with hi-res rendered artwork that could be used for any graphic design.

Advance planning can, in many cases, minimize or even avoid taxes on IRA distributions and other qualified plan distributions. When contemplating future retirement and when to begin tapping taxable IRA and other qualified retirement accounts, taxpayers need to consider a number of important issues.

Early Distributions (before 59.5) – If funds are withdrawn before reaching age 59 ½, the taxpayer is also subject to a 10% early withdrawal penalty (and state penalties if applicable) in addition to the income tax on the IRA distribution, unless what is referred to as the substantially equal payment exemption is utilized. Under this exception, an early retiree can begin taking substantially equal payments at least once a year over the owner’s life or joint lives of the owner and designated beneficiary. The payments must Read more

June 2015 Individual Due Dates

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June 1 – Final Due Date for IRA Trustees to Issue Form 5498

Final due date for IRA trustees to issue Form 5498, providing IRA owners with the fair market value (FMV) of their IRA accounts as of December 31, 2014. The FMV of an IRA on the last day of the prior year (Dec 31, 2014) is used to determine the required minimum distribution (RMD) that must be taken from the IRA if you are age 70½ or older during 2015. If you are age 70½ or older during 2015 and need assistance determining your RMD for the year, please give this office a call. Otherwise, no other action is required and the Form 5498 can be filed away with your other tax documents for the year.

June 10 – Report Tips to Employer

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