Retire Safe & Tax Free - Tax Season Q & A


Q: May I deduct losses in my IRA on my 2014 tax return?

A: Not unless you withdraw the entire balance from all of your IRAs of the same type. Losses and gains are not taken into account on your tax return while your IRA is still open.

Q: Am I subject to the Net Investment Income Tax?

A: This 3.8% tax applies to certain net investment income of individuals, estates and trusts that have income above statutory threshold amounts so it depends on your individual situation. Your tax professional can help you determine the answer.

Q: I inherited an IRA from my cousin who passed away in March 2014 at age 73. He passed away before taking his 2014 RMD so I took the missing RMD in July. Is the RMD reported on his estate tax return or my 2014 tax return?

A: Your tax return. Year of death RMDs are reported on the recipient's tax return.

Q: I retired and directly rolled over my entire 401(k), including my highly appreciated employer stock, to an IRA last year. I recently discovered that a Net Unrealized Appreciation (NUA) strategy could give me a huge tax advantage. Since I haven't filed my tax return yet, may I still elect to use an NUA strategy?

A: No. Unfortunately, once you rolled over your highly appreciated employer stock to an IRA, the opportunity to use an NUA strategy was permanently eliminated. To preserve an NUA strategy opportunity, among other requirements, the shares must have been transferred in-kind to a taxable account.

Q: I requested my 2014 RMD on December 30th but my IRA custodian told me I will get a 1099-R for 2015, not 201... why?

A: The distribution year is determined by the processing date, not the request date. Make sure you know your IRA custodian's deadline for processing RMD requests. Some custodians require them to be submitted by early December to ensure processing is complete by the deadline. There is a 50% IRS penalty for failing to take an RMD by December 31st.

Contact: Marc H. Weiss, Archer Weiss Insurance and Financial Services

(818) 610-8560