19-Feb-2010
By attorney, Jason Ray   Early Distributions from Retirement Accounts Many people are considering new ways to make ends meet. You may hear proposals in the news of the government allowing unemployed individuals to take an early distribution from an IRA or Qualified Pension Plan without penalty. Or you may think that you need the money now and are willing to risk it. While there may be a way to take some money out without penalty, the process can be complicated. If not done properly, you may find that taking an early distribution will create a substantial tax liability. We can take you through the process of planning for distributions from any type of retirement account. Whether you want to plan for the future or an immediate transfer, we can help ensure that the distributions limit your tax liability and provide you the greatest flexibility available in using your funds.   Underpayment and Deficiency Problems It seems like everyone today is undergoing cash problems. Among those having the most difficulty are our federal and state governments. In order to solve their revenue problems, they have to collect. If you have received a notice from the IRS that you owe a deficiency or if you plan on filing without paying the amount shown on your return, be careful not to procrastinate. Interest and penalties accrue over time, the government’s powers to collect are much broader than any other creditor and the government usually has a significant amount of leverage. This is especially true in underpayment cases where the taxpayer admits liability by showing it on the return. We can help you develop and implement a plan to resolve your tax liabilities in as little time as possible, deal with the IRS collection officers on your behalf, and make sure your rights are covered from beginning to end.   Income Tax Arising from Debt Relief Many people have lost their homes and investment properties recently to foreclosure. If this has happened to you, foreclosure may be only the beginning of your troubles. At a time when your income is substantially less than normal, the bank may write off your debt and send you a notice that you owe Federal Income Tax on the debt they forgave.    You may also receive notice that you owe tax if a bank decides to write off other debts, including car loans and credit card debt. If you have received a Form 1099A or Form 1099C from your bank give us a call. We’ll ensure that if there is a way out of paying the tax, you will be able to take advantage to the fullest extent possible.    Set up an appointment to discuss any of these issues by calling our office. Pre-Paid Legal Members call 800-435-5081.  Non-Pre-Paid Legal Members call 480-733-6800.