To e-file or not to e-file when you have SEPP
L1: To e-file or not to e-file when you have SEPPI began my SEPP on 1/16/2014 using monthly withdrawals from Fidelity. My DOB is 1/15/1959.
I use Turbotax to do my taxes. From other posts I see that it can handle the necessary 5329 form for my SEPP. However, I wonder if other folks with SEPPs have any experience with it being better to e-file or not.
Last year I did an e-file and received an automated letter that I owed more tax. It was not true. I think their software was looking for a specific number dollar amount on a line number. I had paid the tax, but there was an additional amount also included on the line in question, so then the total did not match what their program was looking for. I had to call and speak with a couple of people, and luckily was able to resolve it without paying additional tax. Technically, it was not an audit.
So I am wondering if this year, since I will have a 1099-R with Box 7 coded as 1 (early distribution, no known exceptions), that I may increase my chances of hassles with the IRS if I e-file instead of using paper forms.
If anybody has a good reason to choose either paper forms or e-filing for tax returns with a 5329 for SEPP, I would like to understand it. Thanks for any insights.
2015-02-02 22:13, By: JackF, IP: [18.104.22.168]
L2: To e-file or not to e-file when you have SEPP I competed my Sepp last year with Fidelity. I e-file for the 5 years that I had a Sepp. I use H and R Block software, and I didn’t have any problems.2015-02-02 22:34, By: Chris, IP: [22.214.171.124]
L2: To e-file or not to e-file when you have SEPPI e-file using turbo-tax, tax year 2013 was my first SEPP year. The only thing that makes me nervous is I take medical expense from a SEPARATE IRA in addition to my SEPP. This is reported on the 5329 as a combined sum with a exception code of 12 (more then one exception applies) but I don’t see how the IRS ever would know what the actual exceptions are? I almost feel like including a note explaining what part of that amount is for what.. Of course I can’t attach a note e-filing and even if I paper filed would anyone read the note…
Anyway haven’t heard anything about 2013 (yet) will probably e-file for 2014.
Bob.2015-02-02 22:43, By: Bob85364, IP: [126.96.36.199]
L3: To e-file or not to e-file when you have SEPPThere is no reason not to e file when you maintain a SEPP. All tax programs support the 5329 exception coding and the better ones support explanatory statements when needed. However, there is no particular reason that an explanatory statement would be needed with respect to a SEPP.
Obviously, the more complex your IRA distributions are due to multiple accounts and multiple penalty exception codes, the more likely you would get an inquiry, but that is true whether you efile or not.2015-02-03 00:45, By: Alan S, IP: [188.8.131.52]
L4: To e-file or not to e-file when you have SEPPSince the IRS has been increasingly encouraging taxpayers to e-file, and 85 million or so do so, there is probably more reason for IRS to audit a paper return because they wonder why you did not e-file.
With the budget reductions by Congress, the IRS had been reducing the number of audits. Having a SEPP has no bearing on whether or not a return will be audited. Since very few people at IRS under SEPP 72-T plans, I think there is a limited chance that yours would be chosen.2015-02-03 02:40, By: dlzallestaxes, IP: [184.108.40.206]