Any tax specialists out there?

[crzyjournalist03]

I'm working on my household's taxes for the year, and I'm having a hard time finding information as to retirement plans. I'm using TurboTax, and unless I pay them $30 to ask a question, I can't find the answer to what I'm looking for.

My wife has a 401(a) retirement plan. Can I count this as an IRA? I had never even heard of a 401(a) until yesterday while I was working on it. The help menu says that you can count 401(k) plans, but I don't know if that's different from a 401(a). I entered it in just to see what would happen, and the tax return difference is more than $600...so if I can count it, I really want to.

[crzyjournalist03]

anybody out there know what I'm talking about?

[j_dog]

I also have never heard of a 401a, but for deductions, the key is how the 401 was reported to IRS. All plans that I know of take the withholding off the TOP of your pay, so the "deduction" is already taken.

Example One:

401 plan, Earnings, $10,000, contribute $1,000, net pay = 9,000, therefore the reported taxable W2 income would be $9,000.


Example Two:

IRA , Earnings, $10,000, received $10,000, contributed $1,000 to IRA. Net taxable pay will = $10,000, therefore the reported taxable W2 income would be $10,000. Then, on your tax return you will deduct the $1,000 IRA contribution which will place you on about the same footing as the 401 withholding.

So the trick is to calculate your wife's gross pay for the year, and compare that to her W2. That should show you whether her 401 contribution has already been deducted by the employer. My guess is that you will find that it has already been deducted, and you would then be in trouble with IRS if you deduct it again. If in doubt, ask her employer whether the contribution has already been deducted from taxable income on the W2.

I hope this helps some.

[crzyjournalist03]

Originally posted by j_dog
I also have never heard of a 401a, but for deductions, the key is how the 401 was reported to IRS. All plans that I know of take the withholding off the TOP of your pay, so the "deduction" is already taken.

Example One:

401 plan, Earnings, $10,000, contribute $1,000, net pay = 9,000, therefore the reported taxable W2 income would be $9,000.


Example Two:

IRA , Earnings, $10,000, received $10,000, contributed $1,000 to IRA. Net taxable pay will = $10,000, therefore the reported taxable W2 income would be $10,000. Then, on your tax return you will deduct the $1,000 IRA contribution which will place you on about the same footing as the 401 withholding.

So the trick is to calculate your wife's gross pay for the year, and compare that to her W2. That should show you whether her 401 contribution has already been deducted by the employer. My guess is that you will find that it has already been deducted, and you would then be in trouble with IRS if you deduct it again. If in doubt, ask her employer whether the contribution has already been deducted from taxable income on the W2.

I hope this helps some.

ah...ok...her gross income was shown to be short by the amount that she contributed, so I guess it was taken out beforehand...well darn...there goes $600 bucks.

[j_dog]

Originally posted by crzyjournalist03
ah...ok...her gross income was shown to be short by the amount that she contributed, so I guess it was taken out beforehand...well darn...there goes $600 bucks.
think of it this way. good thing you asked. you might not have looked good in stripes. ;)

[injuredinmelee]

Sorry... I used a box.

[eppy 12]

Originally posted by j_dog
think of it this way. good thing you asked. you might not have looked good in stripes. ;) http://i97.photobucket.com/albums/l239/eppy12/parisprison-thumb.jpg

[crzyjournalist03]

Originally posted by injuredinmelee
Sorry... I used a box.

I thought about going ahead with the extra refund and using that line to explain it to the IRS if they ever came after me, especially considering that Tubo Tax determined that my likelihood of an audit was about as low as possible, even with the extra cash.

[icu812]

If we had the fairtax think how much time we'd all save, thus the more money we'd make and lower blood pressure we would all have.

[j_dog]

Originally posted by crzyjournalist03
I thought about going ahead with the extra refund and using that line to explain it to the IRS if they ever came after me, especially considering that Tubo Tax determined that my likelihood of an audit was about as low as possible, even with the extra cash.
but the chances of IRS matching your return to your W2's and IRA's is 100%. Their computers are too dumb to get tired. :D So they keep on working! ;) They have your Social, and the amounts. If the numbers don't match, I promise you IRS WILL come after you.

It would have only caused you penalties and interest, not to mention the headaches of a possible amended return.

[Ranger Mom]

My stepmom bought Turbo Tax and I figured mine on there, got the results and immediately went to TaxAct.com....(since they don't charge to e-file or direct deposit). When my totals matched up in the end I submitted it through TaxAct and saved myself $47!

[Heffelfinger]

Try TaxAct.com. It is free at the basic level and has standardized response help. This might help.