THE TAX BOOK CLEARLY SUPERIOR to QF

[John of PA]

Again I have run into a situation where I wasted my time going to Quickfinder first. QF page 14-12 states that if a taxpayer failed to withdrawl a RMD from an IRA, they first must pay the 50% penalty, then file to get it back. The Tax Book (Deluxe) explains on page 13-25 that the requirement to first pay the tax no longer applies.

[Brad Imsdahl]

That was in the instructions for the 2005 tax year Form 5329 instructions, which say:

Note. The IRS can waive this tax if you
can show that any shortfall in the
amount of withdrawals was due to
reasonable error and you are taking
appropriate steps to remedy the
shortfall. If you believe you qualify for
this relief, file Form 5329 and attach a
letter of explanation.

The 2004 tax year Form 5329 instructions say the following:

Note. The IRS may waive this tax if
you can show that any shortfall in the
amount of withdrawals was due to
reasonable error and you are taking
appropriate steps to remedy the
shortfall. If you believe you qualify for
this relief, file Form 5329, pay the tax,
and attach a letter of explanation. If the
IRS waives the tax, we will send you a
refund.

Clearly, the requirement to first pay the tax was removed from the 2005 instructions.

[John of PA]

Thank You Brad

Thank you Brad, I was wondering how far back the change went and you answered it.