Taxpayer did not take their $30,000 RMD for 2017. Should the amount be reported on their 2017 tax return (no 1099R received) and then reverse it on the 2018 return it would be reported. They are in the 30% tax bracket so not sure any exceptions would apply to them? Thanks,,,Duane Anderson
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What should be done IMMEDIATELY, before the 2017 tax return is filed, is have the RMD for 2017 taken out NOW, with Federal income tax (and State income tax if applicable). Then once the RMD for 2017 is taken, on the back of Form 5329 there's a section for requesting a waiver of the 50% penalty for not taking the RMD. providing an explanation of why it wasn't taken, and corrective action was taken prior to the filing of the 2017 tax return. Of course, the taxpayer will need to take the RMD for 2018 in addition to that not necessarily simultaneously but before the end of the year.Uncle Sam, CPA, EA. ARA, NTPI Fellow -
It is my understanding that the 2017 RMD amount will be reported in 2018 since that is when it was actually withdrawn. The custodian will report via 1099-R for next year. Then, as you say, the actual amt required for 2018 must also be taken before year-end and it will also be reported for 2018.Comment
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Yes - the 2017 RMD taken in 2018 will be reported on 1099-R for 2018 - but by taking the steps outlined above - you avoid the 50% penalty.Uncle Sam, CPA, EA. ARA, NTPI FellowComment
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My history with missed RMD's is that the IRS will waive the 50% penalty on the 1st occurrence only. Also, what confuses taxpayers is that the 1st distribution has to be taken by April 15, and all future RMD's must be taken by 12/31.Comment
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RMDs are taken during the tax year, by 31 December. The very first year can be extended to the following 1 April; however, that will mean two the second year after zero the very first year.Comment
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I think he was referring to the missed RMD being taken by 4/15.Comment
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