Estimating My Income Tax for This Year

[easyrider]

We use a cpa but usually have them run the numbers after Thanksgiving to see what happening. Not so much happening now that I retired the construction company. This year I heard we may be getting another tax cut on top of the larger standard deduction.

Bill

 

[CalGalTraveler]

I did not know about the CPA options with Turbotax. Sounds like some good options for when we retire and dont need to file business taxes.

I have had a favorable opinion of Turbo tax until this year. A friend and I have been researching rolling the pretax portion of our nondeductible IRAs into a corporate retirement plan at work and then taking the post tax contributions that remain as a conversion to a Roth next year.

Good news is that I learned that my CPA had been filing 8606 forms annually to notify the IRS that those are post tax contributions so there will be minimal gain on the Roth conversion. This will save us thousands and avoid RMDs on the post tax contributors when they convert to Roth

My friend was not so lucky because she was too cheap to hire a CPA (she is a Dr. and could definitely afford) but stubbornly did her own taxes by hand and ultimately TurboTax and these two methods did not produce the 8606s for many years. Not sure if this was a TurboTax issue or user response error. She now has no way of proving to the IRS that these were nondeductible contributions and ptobably will end up being double taxed on those contributions.

Sometimes you dont know what you dont know when it comes to taxes.

 

[controller1]

I did not know about the CPA options with Turbotax. Sounds like some good options for when we retire and dont need to file business taxes.

I have had a favorable opinion of Turbo tax until this year. A friend and I have been researching rolling the pretax portion of our nondeductible IRAs into a corporate retirement plan at work and then taking the post tax contributions that remain as a conversion to a Roth next year.

Good news is that I learned that my CPA had been filing 8606 forms annually to notify the IRS that those are post tax contributions so there will be minimal gain on the Roth conversion. This will save us thousands and avoid RMDs on the post tax contributors when they convert to Roth

My friend was not so lucky because she was too cheap to hire a CPA (she is a Dr. and could definitely afford) but stubbornly did her own taxes by hand and ultimately TurboTax and these two methods did not produce the 8606s for many years. Not sure if this was a TurboTax issue or user response error. She now has no way of proving to the IRS that these were nondeductible contributions and ptobably will end up being double taxed on those contributions.

I'm really not a TurboTax apologist, BUT a Form 8606 would be produced by TurboTax if one uses the "questionnaire" entry instead of the form entry. The questionnaire entry will ask about IRA contributions and will ask questions about pre- or post-tax contributions. Unless one is a CPA, one should really use the questionnaire type of entry.

 

[CalGalTraveler]

She probably didnt do the questionnaire but not sure.

This is not the first time our CPA has saved our bacon!

 

[WinniWoman]

I had an issue with Tax Act with the IRA distributions from my deceased mothers' account. I should not have been paying NYS taxes on it but it did not calculate the returns that way. When I realized it years later -because of something tax act did based on my age in the calculations- I had to pay an accountant (who I had used in the past to do our returns) to do amended returns- I could not trust doing them on Tax Act myself since it was a glitch in the Tax Act program to begin with. There were two years I could not claim because the time limit for amending the returns had expired.

In any event, even with paying the accountant to do the amended returns, I ended up $1500 richer (I think) or so from what I recall.