Client had reached the age of 60 and had a $200K mortgage which he was tired of making the mortgage payments of $1700. So what did he do? He chose a lump sum pension payout of $200K instead of monthly forever. Took the lump sum and paid off the mortgage. Now he doesn't have a mortgage payment, and consequently, no home interest writeoff, no pension and when adding the $200K to his income, now has a $65K tax liability. Is there any suggestions out there that could ease the burden for 2011 for him?
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I can't help him.....Maybe an IRS payment plan of $1,700 a month will help.
He needs to get a reverse mortgage...................... if he has no other source of income or liquid assets.Last edited by BOB W; 05-02-2011, 02:43 PM.This post is for discussion purposes only and should be verified with other sources before actual use.
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Tell him to call you about the tax consequences before he makes any rash financial moves. Oh, sorry, that train has already left the station.
I'm thinking he can get his monthly installment agreement payment down to about $1,250, but other than that, about all he accomplished was to reduce his mortgage to $65,000 and his monthly pension income to -0-."The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith
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Bad choice
I had the same situation in 1985, I took the lump-sum, made some withdrawals subject to penalty for early withdrawals, but invested the money. Today I've paid off that mortgage and two others and still have more in my rollover IRA than I started with.
Never put all your eggs in one basket.
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Maybe he could close the loop by trying an OIC based on Doubt as to Collectibility because now he has no income.
(Of course, that's a bit like killing your parents and then asking for mercy because you're an orphan)."The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith
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Originally posted by zeros View PostClient had reached the age of 60 and had a $200K mortgage which he was tired of making the mortgage payments of $1700. So what did he do? He chose a lump sum pension payout of $200K instead of monthly forever. Took the lump sum and paid off the mortgage. Now he doesn't have a mortgage payment, and consequently, no home interest writeoff, no pension and when adding the $200K to his income, now has a $65K tax liability. Is there any suggestions out there that could ease the burden for 2011 for him?
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He has a wife that has a full time position. His pension would have been around $1700 per month. Sounds like the case is hopeless. I suppose he can make sure that he paid in 2011 at least his liability in 2010 so he doesn't get a penalty.Last edited by zeros; 05-03-2011, 08:41 AM.
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