WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

 

*  Kay Bell lists “10 tips to help you deal with an IRS tax notice” at DON’T MESS WITH TAXES. 

Good advice from Kay.  However, she fails to mention that if you receive a notice for a return prepared by a tax professional send/give the notice to the preparer immediately.

And as for item #7 – I personally doubt you will get much help by calling the IRS, if you can get through to an actual person.  Questions about the notice should be directed to your, or a, tax pro.

* A client (from before I retired) shared with me Michelle Lodge discussion “The Importance of IRS Form 8606 For Heirs of IRAs” at FORBES.COM.

Of special note is the section on “Tax Implications for IRA Beneficiaries”.  Taxpayers who inherit an IRA account should contact the Executor of the Estate to find out if the deceased taxpayer had been filing a Form 8606 for IRA distributions received prior to passing – and get a copy of the last Form 8606 filed if the answer is yes. 

The beneficiary not only inherits the IRA account but also any carryforward basis.  A “basis” in an IRA comes from previously non-deductible contributions, either directly to the IRA or from any retirement account that was rolled-over into an IRA.

If you have ever filed a Form 8606 and have a carryforward basis you should include a Form 8606 with every subsequent tax return, even if you did not receive a distribution from your IRA.  This way you will not forget the carryforward basis and if you change tax preparers the new one will know that a carryforward basis exists and will properly apply it to future distributions.

Of course, I take extreme exception to her advice to “always work with a knowledgeable CPA”.  For years I have been saying that the correct advice is “always work with a knowledgeable tax professional”!

* Nick Defenthaler discusses “Roth IRA Conversions & IRMAA: Don't Get Hit with Surprise Medicare Surcharges” at THE STREET.

The potential of an IRMAA needs to be considered in many tax scenarios – including whether to file joint or separate returns.

TTFN