CP 2000 notice for 2011

[S T]

IRS sent a CP 2000 notice for disallowance of a $ 5,000 IRA deduction, active participant - self prepared return

Waiting for the copy of the W-2 - so far the only information the T/P can provide is that they were employed by a Company that particpated with the Carpenter's Union I really want the W-2 form, so waiting for that -

Question, does participating in the Carpernter's Union disqualify the T/P from deducting an IRA - in otherwords, is the Carpenter's Union an "Employee Sponsored Plan" and the Retirement Box is checked on the W-2 issued by the Employer???

Sandy

[BOB W]

Sandy, it dosen't look good. If it qualifies as wages and his total income qualifies, it may be OK. (Since it is marked as having a pension plan, total income becomes an issue).

[ATSMAN]

Watch out for the union members. Some years if they work on a Govt. project they may participate in a Davis-Bacon retirement plan in which case the W2 may be marked as having participated in the plan, but your client may not have any idea that they were participants in a plan.

[New York Enrolled Agent]

IRS sent a CP 2000 notice for disallowance of a $ 5,000 IRA deduction, active participant - self prepared return

Question, does participating in the Carpernter's Union disqualify the T/P from deducting an IRA -

It's hard to give a definitive answer without all the facts. Your client probably is a participant in a money purchase plan established by collective bargaining. The employer typically puts in a negotiated amount for each hour of work by the union member.

IF (always the operative word) that is the situation, then the client is an active participant as per Reg. §1.219-2. §219 permits the deduction for an IRA assuming all the conditions are met.

Reg. §1.219-2(c) Money purchase plan.
An individual is an active participant in a money purchase plan if under the terms of the plan employer contributions must be allocated to the individual's account with respect to the plan year ending with or within the individual's taxable year. This rule applies even if an individual is not employed at any time during the individual's taxable year.

[JON]

Phase-out

if he was an active participant, union they usually are, in 2011 the deduction for an IRA for marriesd filing jointly is $90,000 to $110,000, filing single is $56,000-$66,000. I think you may end up with a non deductible IRA to start tracking.. What happened in 2012?? or before???

[S T]

Thanks for the posts and references,

Apparently this was a Union Employer, and the DIY TT t/p in 2011, did not complete the interview sheets correctly, marking the "retirement box"

I still do not have a copy of the 2011 W-2, but t/p did forward the Union Statement -

So it does seem the Employer did particpate or sponsor some type of benefit for the T/p which would disqualify t/p from the "deductible IRA" indicated. Now extra tax dollars owed - and I will also have to complete a Form 8606 for correction.

This will be the 2nd Amendment that I have completed for the 2011 DIY prepared return.

2012 should be hopefully be a "none issue" as t/p was not working for an employer - entered into a partnership LLC - no retirement plan in place

Thanks


Sandy