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Old 11-13-2013, 07:34 PM
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Does RMD change filing status??

My friend is single and seventy. He lives on social security only with very little in additional income. He has not filed a return for 5 years since he quit working. Now it is time to take his rmd from his employer sponsored IRA. His first withdrawal from the IRA will be about 1600.00.

Does he now have to start filing a return every year? And if not how does he notify the IRS he has complied with their rules??

Wingryder



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Old 11-14-2013, 02:32 PM
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Originally Posted by Wingryder View Post

#1;Does he now have to start filing a return every year?


#2;And if not how does he notify the IRS he has complied with their rules??

Wingryder
1;I guess he needs to file his return as long as he has Federal(state) taxes withheld from his pension(a pension falls under traditional IRA rules) for this tax year and wishes to get a refund back or due to higher AGI, he has amount on line 61 that is larger than the amount on line 72. For IRA,the contributions grow tax free, but at age 70 1/2, the IRS wants account owners to begin taking the RMD out of those accounts with income tax paid on the withdrawals.A traditional IRA is, however, subject to required minimum distributions. Your friend has to start taking these distributions in the year he turns 70½, though he can wait until April 1 of the year after he turns 70½. Social Security benefits can become taxable depending on your marital status and modified adjusted gross income. MAGI includes taxable pensions, wages, interest, dividends, any tax-exempt interest income plus half of his Social Security benefits. As long as yur friend is single, then, UNLESS the amount of his MAGI exceeds $25K for 2013, he doesn’t need to pay tax on his soc sec benefits. He needs to report his IRA distributions on line 15b of 1040. He needs to look at boxes 4 and 12 or 15 of his Form 1099-R statement. As long as he has any amounts in these boxes, then he needs to include these amounts for his tax withheld. The amount in box 4 is added to his other withholding on Form 1040 Line 62. The amount in box 12/15 is added to his state/local tax withholding on your state tax form. So as long as the amount on line 62and 72 on 1040 is larger than the amount on line 61, then he needs to file his return for tax refund.

NOTE: his IRA minimum required distribution must be included as part of his taxable income when he files his federal income taxes. His financial institution sends him a Form 1099-R at the end of the year that shows the taxable portion of the distribution. When he files his income taxes, he must report the amount as a taxable IRA distribution. Since the IRS uses a progressive income tax rate, the tax rate on his minimum distribution will vary: the higher his total income, the higher the tax rate.

State Income Taxes
He also will owe state income taxes on his IRA minimum required distribution if his state has an income tax. If he lives in a state without an income tax, his distribution will be tax-free. Many states also use a progressive tax rate structure like the federal government, which means that the higher his total income, the higher his state income tax rate will be on his IRA minimum distribution


#2; His custodian will calculate the appropriate amount for his account and send his distribution on a date he specifies each year. Although the IRA custodian or retirement plan administrator may calculate the RMD, the IRA or retirement plan account owner is ultimately responsible for calculating the amount of the RMD.



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Old 11-14-2013, 04:31 PM
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Thank you for responding Moderator Wnhough... but your reply is not visable to me.
I logged in, I refreshed, then I ran out of ideas. Please post it again.



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Old 11-14-2013, 04:41 PM
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Ok its up there now but I think I need to explain better. Since he has only SS now he does not file. The only thing that is going to change for him is his required ira withdrawals. My question is.. will his 1600.00 required IRA withdrawal kick him into having to file.?? (Is there not a 11,500 income level (not including ss or maybe even half of ss?) before filing is necessary)?. Even if you have to claim half of your SS and add in the 1600 from rmd , he is still less than 11,500.

I don't think he has to do anything except move the required amount from his IRA every year from now on. Right? or not.


Last edited by Wingryder : 11-14-2013 at 04:47 PM.


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Old 11-14-2013, 05:26 PM
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Originally Posted by Wingryder View Post


#1;Ok its up there now but I think I need to explain better. Since he has only SS now he does not file. The only thing that is going to change for him is his required ira withdrawals.



#2;My question is.. will his 1600.00 required IRA withdrawal kick him into having to file.?? (Is there not a 11,500 income level (not including ss or maybe even half of ss?) before filing is necessary)?. Even if you have to claim half of your SS and add in the 1600 from rmd , he is still less than 11,500.

#3;I don't think he has to do anything except move the required amount from his IRA every year from now on. Right? or not.
#1;As mentioned previously, as single, UNLESS his MAGI exceeds $25K, he doesn’t need to pay tax on his soc benefits.


#2;As mentioned previously, IF there is any number on line 4, 12, or 15 of 1099R, then, he needs to file for tax refund for the tax withheld from his IRA rmd.

#3;As mentioned abvove it depends.


Last edited by Wnhough : 11-15-2013 at 01:43 PM. Reason: correction


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Old 11-15-2013, 01:51 PM
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CORRECTION; #1;As mentioned previously, as single, UNLESS his MAGI exceeds $25K, he doesn’t need to file his return.===========>>>As single, UNLESS his MAGI exceeds $25K, he doesn’t need to pay income tax on his soc sec benefits;please make a note of this. So rry it is my bad.So as long as(IF) his MAGI exceeds $25K or $25K, he still needs to file return,depending on the situation,i..e, deduction, itemized deductions or etc...



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Old 11-15-2013, 09:35 PM
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Originally Posted by Wnhough View Post
CORRECTION; #1;As mentioned previously, as single, UNLESS his MAGI exceeds $25K, he doesn’t need to file his return.===========>>>As single, UNLESS his MAGI exceeds $25K, he doesn’t need to pay income tax on his soc sec benefits;please make a note of this. So rry it is my bad.So as long as(IF) his MAGI exceeds $25K or $25K, he still needs to file return,depending on the situation,i..e, deduction, itemized deductions or etc...
Sounds like the MAGI 25K is the key. His income does not exceed that figure. Sorry I required repeat posts.
Thanks for your help.
Wingryder



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