Pension + IRS = Screwed
04-14-2008, 10:30 AM
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Pension + IRS = Screwed
So I was finishing things up with the accountant today and all with 2007 taxes. All in all - in terms of both federal and state we owe a difference of $100. That's fine and dandy.
I get a letter from the IRS about 2006 a week ago. I have no clue what it all means so I scan the letter and send it over to the accountant (last night). I call her this morning to answer a few questions.....she ends up telling me that we may owe $25,000+!!!!!!!!!!!!!!
Then she says, "oh wait!" She says it may actually be less and it may just be $12,000 - $20,000. This is from getting a pension check from NJ b/c of my husband's mom's death. The first estimate she gave was without noticing $14,000 withheld.
I'm not saying that she's wrong, but there's so much going on at a the moment and we wanted to buy a house. We only have so much money in reserve at the moment (buying house + IRS = depleted account).
Why must this happen to us?!?!?! I'm sick to my stomach just thinking about it all.
I get a letter from the IRS about 2006 a week ago. I have no clue what it all means so I scan the letter and send it over to the accountant (last night). I call her this morning to answer a few questions.....she ends up telling me that we may owe $25,000+!!!!!!!!!!!!!!
Then she says, "oh wait!" She says it may actually be less and it may just be $12,000 - $20,000. This is from getting a pension check from NJ b/c of my husband's mom's death. The first estimate she gave was without noticing $14,000 withheld.
I'm not saying that she's wrong, but there's so much going on at a the moment and we wanted to buy a house. We only have so much money in reserve at the moment (buying house + IRS = depleted account).
Why must this happen to us?!?!?! I'm sick to my stomach just thinking about it all.
04-14-2008, 10:42 AM
#2
Originally Posted by pinky_ttc
So I was finishing things up with the accountant today and all with 2007 taxes. All in all - in terms of both federal and state we owe a difference of $100. That's fine and dandy.
I get a letter from the IRS about 2006 a week ago. I have no clue what it all means so I scan the letter and send it over to the accountant (last night). I call her this morning to answer a few questions.....she ends up telling me that we may owe $25,000+!!!!!!!!!!!!!!
Then she says, "oh wait!" She says it may actually be less and it may just be $12,000 - $20,000. This is from getting a pension check from NJ b/c of my husband's mom's death. The first estimate she gave was without noticing $14,000 withheld.
I'm not saying that she's wrong, but there's so much going on at a the moment and we wanted to buy a house. We only have so much money in reserve at the moment (buying house + IRS = depleted account).
Why must this happen to us?!?!?! I'm sick to my stomach just thinking about it all.
I get a letter from the IRS about 2006 a week ago. I have no clue what it all means so I scan the letter and send it over to the accountant (last night). I call her this morning to answer a few questions.....she ends up telling me that we may owe $25,000+!!!!!!!!!!!!!!
Then she says, "oh wait!" She says it may actually be less and it may just be $12,000 - $20,000. This is from getting a pension check from NJ b/c of my husband's mom's death. The first estimate she gave was without noticing $14,000 withheld.
I'm not saying that she's wrong, but there's so much going on at a the moment and we wanted to buy a house. We only have so much money in reserve at the moment (buying house + IRS = depleted account).
Why must this happen to us?!?!?! I'm sick to my stomach just thinking about it all.
04-14-2008, 11:30 AM
#3
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Originally Posted by pinky_ttc
This is from getting a pension check from NJ b/c of my husband's mom's death.
Why must this happen to us?!?!?! I'm sick to my stomach just thinking about it all.
Why must this happen to us?!?!?! I'm sick to my stomach just thinking about it all.
and yeah, taxes suck.
04-14-2008, 11:45 AM
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Originally Posted by ChodTheWacko
How does the pension check via death work?
and yeah, taxes suck.
and yeah, taxes suck.
She passed away in August of 2005. She worked as a teacher for decades in NJ. We ended up getting over $120,000 from her pension. They withheld taxes already, but not enough obviously.
The accountant just emailed me the total: $18,000+ and that doesn't include state taxes. This has got to be the crappiest thing for us at the moment. We've withdrawn all offers in terms of finding a new house and now we're just going to focus on this situation.
Yup....taxes suck.
04-14-2008, 12:28 PM
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No offense I hope but no one is "screwing" you.
If you recieved such a large amount of money in what's basically a life insurance payout then you should have contacted a tax accountant upon reciving the check.
Did you blow the $120k away already? I'd imagine if you're house shopping you'd still have quite a large chunk of that saved for your down payment in which you would have enough to cover the tax bill and simply reduce your down payment.
That is, unless you had other expenses you used the $120k for.
If you recieved such a large amount of money in what's basically a life insurance payout then you should have contacted a tax accountant upon reciving the check.
Did you blow the $120k away already? I'd imagine if you're house shopping you'd still have quite a large chunk of that saved for your down payment in which you would have enough to cover the tax bill and simply reduce your down payment.
That is, unless you had other expenses you used the $120k for.
04-14-2008, 12:34 PM
#7
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Originally Posted by pinky_ttc
She passed away in August of 2005. She worked as a teacher for decades in NJ. We ended up getting over $120,000 from her pension. They withheld taxes already, but not enough obviously.
Same thing happened to us... My late father's pension was paid with pre-tax dollars, so someone had to pay the taxes... My dad's accountants told us all about it before hand, so we weren't surprised about the tax implications.
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04-14-2008, 01:00 PM
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Originally Posted by refbuz
Imagine what the bill would be if a Democrat was in office...
Probably double...
The rates for the "Rich" (aka, people making above $75k according to Obama) are gonna skyrocket if he takes office and will equal the single highest tax increase in the history of our country. Can't wait!
04-14-2008, 02:02 PM
#11
Originally Posted by mrsteve
Probably double... The rates for the "Rich" (aka, people making above $75k according to Obama) are gonna skyrocket if he takes office and will equal the single highest tax increase in the history of our country.
Can't wait!
The rates for the "Rich" (aka, people making above $75k according to Obama) are gonna skyrocket if he takes office and will equal the single highest tax increase in the history of our country. Can't wait!
04-14-2008, 02:53 PM
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Originally Posted by korrupted
Well the Democrats have to "make up" for the tremendous deficit Bush has created for this county.
Sorry, Bush doesn't sign the checks.
Try again.
04-14-2008, 02:54 PM
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Originally Posted by gatrhumpy
Wait wait wait. What about those people making $75 grand in San Fransisco, NYC, Miami, and San Diego? That's minimum wage there!
Tough shit. His tax cut plans are focused on the "middle class." And the plans specifically only call for tax cuts on those making less than $75k. And once the Bush tax cuts expire in 2010 (which they will under Obama or Hillary) those making $75k and up will have their taxes increased.
04-14-2008, 03:14 PM
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Originally Posted by mrsteve
No offense I hope but no one is "screwing" you.
If you recieved such a large amount of money in what's basically a life insurance payout then you should have contacted a tax accountant upon reciving the check.
Did you blow the $120k away already? I'd imagine if you're house shopping you'd still have quite a large chunk of that saved for your down payment in which you would have enough to cover the tax bill and simply reduce your down payment.
That is, unless you had other expenses you used the $120k for.
If you recieved such a large amount of money in what's basically a life insurance payout then you should have contacted a tax accountant upon reciving the check.
Did you blow the $120k away already? I'd imagine if you're house shopping you'd still have quite a large chunk of that saved for your down payment in which you would have enough to cover the tax bill and simply reduce your down payment.
That is, unless you had other expenses you used the $120k for.
My husband didnt have a job at the time and we did have an accountant - however, we did not notify them at the time. It had said that tax was withheld already.
At the time, he used the money and a bit more to get a condo in the area.
We can cover the tax - that's not an issue - I just wish we knew about this before or at least had it taken care of before. (This was a 2006 Tax Year issue)
We like to have a large cushion of money (back up and all) and it's just unfortunate that it had to be this way especially when it's stressful as it is being days before taxes are due.
And the taxes are about 1/3 of the total. They took out less than 10% and we're just forking out the other 20% or so. That doesn't include state taxes.
04-14-2008, 03:19 PM
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Originally Posted by pinky_ttc
I know that no one is technically screwing us over.
My husband didnt have a job at the time and we did have an accountant - however, we did not notify them at the time. It had said that tax was withheld already.
At the time, he used the money and a bit more to get a condo in the area.
We can cover the tax - that's not an issue - I just wish we knew about this before or at least had it taken care of before. (This was a 2006 Tax Year issue)
We like to have a large cushion of money (back up and all) and it's just unfortunate that it had to be this way especially when it's stressful as it is being days before taxes are due.
And the taxes are about 1/3 of the total. They took out less than 10% and we're just forking out the other 20% or so. That doesn't include state taxes.
My husband didnt have a job at the time and we did have an accountant - however, we did not notify them at the time. It had said that tax was withheld already.
At the time, he used the money and a bit more to get a condo in the area.
We can cover the tax - that's not an issue - I just wish we knew about this before or at least had it taken care of before. (This was a 2006 Tax Year issue)
We like to have a large cushion of money (back up and all) and it's just unfortunate that it had to be this way especially when it's stressful as it is being days before taxes are due.
And the taxes are about 1/3 of the total. They took out less than 10% and we're just forking out the other 20% or so. That doesn't include state taxes.
I'm surprised they caught the 2006 error so quickly. It usually takes longer.
I got nailed in '06 for an error in '03.
04-14-2008, 03:41 PM
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Originally Posted by mrsteve
Tough shit. His tax cut plans are focused on the "middle class." And the plans specifically only call for tax cuts on those making less than $75k. And once the Bush tax cuts expire in 2010 (which they will under Obama or Hillary) those making $75k and up will have their taxes increased.
04-14-2008, 03:42 PM
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Originally Posted by mrsteve
I'm surprised they caught the 2006 error so quickly. It usually takes longer.
I got nailed in '06 for an error in '03.
I got nailed in '06 for an error in '03.
04-14-2008, 04:10 PM
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Originally Posted by mrsteve
They add interest.
So he received the pension when he lived in MD. Does he pay MD taxes for the pension or VA taxes (since we live in VA now)?
How do I find out state tax rates?
04-15-2008, 08:17 AM
#22
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Originally Posted by mrsteve
Tough shit. His tax cut plans are focused on the "middle class." And the plans specifically only call for tax cuts on those making less than $75k. And once the Bush tax cuts expire in 2010 (which they will under Obama or Hillary) those making $75k and up will have their taxes increased.
Is this 75k per person?
Or is it 75k combined if you are married??
04-15-2008, 02:17 PM
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Originally Posted by mrsteve
$75k single.
$150k combined.
$600 to singles
$1,200 to combined
$300 to "low-income"
$150k combined.
$600 to singles
$1,200 to combined
$300 to "low-income"
Assuming it's AGI
Gotta love tax shelters.
show me the way 
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