When is an IRA or Pension payment reported to the IRS and how is it taxed?

Expert Solution

When the saving is made for retirement with an individual retirement arrangement (IRA), he/she probably will be receiving a Form 5498 each year. The institution who will be manages the IRA will be required to report on the form all contributions done in the account during the taxation year. On the basis of type of IRA taxpayer have, he/she requires Form 5498 to report IRA contribution deductions on the tax return. On the Form 5498 the IRA Contributions Information reports the contributions made to IRA to the IRS. The IRA issuer or trustee will be filing the form with the IRS by May 31.

Contributions to traditional IRAs will be deductible for the taxation as the earnings grow tax free, but the withdrawals are subject to income tax. Contributions to a Roth IRA would not be eligible for the deductions however the withdrawals are tax-free when the owner has had a Roth IRA account for a period of minimum five years.

ekkarill92 answered 1 year ago

Knowing how the IRS operates, and how and why the IRS audits certain returns, is extremely...

Knowing how the IRS operates, and how and why the IRS audits certain returns, is extremely important to tax practitioners. There are many tax penalties that apply to taxpayers and tax preparers. Explain the following penalties: Failure to File Failure to Pay Accuracy-Related Penalty Fraud Penalty

One of the prerequisites for obtaining a collection alternative from the IRS is: Filing compliance. Payment...

One of the prerequisites for obtaining a collection alternative from the IRS is: Filing compliance. Payment compliance. An unpaid balance for no more than three years. Both 1 and 2.

11. When a market is in equilibrium and that good or service is then taxed, the:...

11. When a market is in equilibrium and that good or service is then taxed, the: a. social marginal benefit of consumption exceeds the social marginal cost of production. b. deadweight loss is greater when the tax is levied on consumers than when it is levied on producers. c. social marginal cost of production exceeds the social marginal benefit of consumption. d. deadweight loss is greater when the tax is levied on producers than when it is levied on consumers....

What is super money and how it is taxed?

In exchange for a lump sum payment now, Binghamton Pension Plan offers an annual pension over...

In exchange for a lump sum payment now, Binghamton Pension Plan offers an annual pension over thirty years beginning with a payment of $50,000 at the start of the first year. There are thirty payments in total and the payments will increase at an annual rate of 3% per year. The appropriate opportunity cost of funds is 6% per year. What is the amount of lump sum needed today to purchase the pension? $1,015,054 $1,016,054 $1,018,054 $1,019,054 $1,020,054

4-63 When the IRS audited Winter Corporation’s current year tax return, the IRS disallowed $10,000 of...

4-63 When the IRS audited Winter Corporation’s current year tax return, the IRS disallowed $10,000 of travel and entertainment expenses incurred by Charles, an officer-shareholder, because of inadequate documentation. The IRS asserted that the $10,000 expenditure was a constructive dividend to Charles, who maintained that the expense was business related. Charles argued that he derived no personal benefit from the expenditure and therefore received no constructive dividend. Prepare a memorandum for your tax manager explaining whether the IRS’s assertion or...

When is it possible to fund a million dollar balance in a newly established IRA?

5- Research about the Internal Revenue Service (IRS) Accounting for Construction Contracts and explain how IRS...

5- Research about the Internal Revenue Service (IRS) Accounting for Construction Contracts and explain how IRS determines the accounting method that can be used in a project. Discuss concepts such as a Small or Large Contractor.

If a company has an underfunded defined-benefit pension plan: A. no payment may be made to...

If a company has an underfunded defined-benefit pension plan: A. no payment may be made to retirees until the company deposits all of the necessary assets into the pension fund. B. the difference between fund assets and amounts owed to retirees will still be paid by the federal Pension Benefit Guaranty Corporation. C. the value of the ABO (but not of the PBO) must be precisely the same as the amount of assets set aside to pay pension benefits. D....

Suppose that a pension fund has to make a payment of $1 million in 2 years...

Suppose that a pension fund has to make a payment of $1 million in 2 years time. It can hold a one year pure discount bond that will pay $1000 in 1 year; or a 3 year bond that will pay a coupon of $100 each year, will be redeemed for $1,000 at the end of the third year. The yield on each bond is 15%. (a) What is the price of each bond? (b) What is the duration of...

Question