First timer with 5329
L1: First timer with 5329Hello. I am currently receiving SEPP , and this is the first year I will have to file form 5329. So I have a couple of questions please.
1. line 59 on my 1040…leave blank or put in a zero?
2. Line 3 on my 5329…leave blank or put in a zero?
Line 1 is for my total distribution from my IRA under mySEPP plan, correct? It says “included in income” so was wondering. ( aren’t all distributions included in income 🙂 )2017-02-12 20:16, By: TCar, IP: [220.127.116.11]
L2: First timer with 5329I always enter a “0” in any field where I have a supporting document that shows why it is -0-. If you leave it blank, then the IRS computer doesn’t have any chance to even look for it, and IRS people do not read tax returns. So, yes, put “0” in both places.
Form 5329 is where “ADDITIONAL TAXES….” are reported, as well as on line 59 of the 1040. You might notice that the narrative opposite “PART 1” states that “you may also have to complete this part to indicate THAT YOU QUALIFY FOR AN EXCEPTION to the additional tax on any early distributions…..” On line 2, you enter the “Early distributions included on line 1 that are not subject to the additional tax.” ALSO, YOU MUST ENTER THE APPROPRIATE EXCEPTION NUMBER FROM THE INSTRUCTIONS (in the narrative area for line 2). NOTE — THE EXCEPTIONS AND RELATED NUMBERS ARE ON PAGE 4 OF THE INSTRUCTIONS FOR FORM 5329 at www.irs.gov. Most people using this list-serve will be using exception # 2, but other exceptions may also apply.
In answer to your final question, in some unique circumstances someone could have made “non-deductible IRA contributions” at some time in their life, and that would mean that all of the distributions might not be included in taxable income.2017-02-12 21:50, By: dlzallestaxes, IP: [18.104.22.168]
L3: First timer with 5329Thankyou sir, for the response.Just curious…If I had not thought to ask you about this , and my preparer had not put zeros in those 2 spots…would that have spurred interest from the IRS? Like them contacting me?
And so for a regular SEPP where there are no non-deductableIRA contributions, line 1 and line 2 should be the same. Right?2017-02-12 22:11, By: Tcar, IP: [22.214.171.124]
L4: First timer with 5329The IRS works in strange, and inconsistent ways. Anything is possible. Also, not all tax software will enter -0-, and sometimes I have to enter it manually. In those situations, I file paper returns, rather than trusting how an e-filed tax return might be handled.
Yes, on form 5329, lines 1 & 2 would both be the same amount, and put a code 2 on the indented line 2.2017-02-12 22:25, By: dlzallestaxes, IP: [126.96.36.199]
L5: First timer with 5329Sounds like if thesoftware does not do this automatically, then I should paper file it to be totally safe. Hopefully this is a rare case and most software will put in the zero’s.2017-02-12 22:30, By: Tcar, IP: [188.8.131.52]