How to (legally) protect a small inheritance from the IRS?

April 22 2018 | Lee Martell

[lee martell]

Remember that song by Tom Jones; "I who have nothing!". That pretty much describes me. I'm near 62 y/o, working part time. I hope to keep working at least for the next eight to ten years, then start taking my Social Security.

I have no savings to speak of. I will always owe the IRS something from unpaid student loans or wrongly filed tax statements. Most times I don't receive any return at all, it's simply 'absorbed' and paid out to the Govt. The one bright spot is that due to a sibling's death last year, I have received about $20.000 from her estate. More should be coming later this year.

My question is, is there anyway to protect that inherited sum of money, to safeguard it, in case the govt. gets tired of waiting for the scheduled payout. I know from experience that the IRS has the ability to go to my bank at any time, and scoop out all that it contains, if they choose to do so. It has happened before, and I've never forgotten the shock.

Some online searches to that question advise setting up a retirement plan. I currently don't have one. Are there short term retirement plans that would allow me excess to my principal without incurring an Early Withdrawal 'punishment' fee? Could I renew such a plan after a few years have passed?

If it matters, I'm a Navy veteran. My next stop would be to ask someone at the Navy hospital to refer me to an advisor. Most people think they know, but have limited knowledge. I want to do things above board, no tricks. But I don't like the notion of being fully vulnerable to the mercies of the tax collection system.

[WASCWatch]

I think Bannister is simply a guy with a very strong moral constitution to do the right thing. Our nation could use more men like that.

[George from New England]

I welcome anyone reading this on this thread to freep mail me or post here.

Has anyone filed their return on paper in the recent year or two? I am finding our lovely i.r.s. punishing paper filers like never before. I filed a late 2016 return 12/27/2017. It is now May 2018. I have to wait by the latest letter until 5/24 for them to either issue a refund or send me another letter. Any attempts to get them on the phone result in automated responses.

Is it time for our lawmaker to force the i.r.s to respect us old school filers and taxpayer that don’t trust the internet?

[George from New England]

I turned 63 last month. I wanted to start collecting at that time. But I have two tax returns being held up more than 4 months now that keep me from getting my retirment started.
Its a shame there is no way to get the I.R.S. to recognize those who need closer on returns to start retirement payouts.

Any suggestions would be appreciated.

[tired&retired]

Sorry, I thought I responded earlier.

I just take the copies of the tax returns and supporting documents to the Social Security. I’ve even gone with clients to SSA to explain them. They will use the copies to get your benefits correct.

I keep all copies of client returns perpetually, prior to my own retirement. Over the years I’ve taken my entire file of 20+ years to SSA to get them to correct their records. This was especially true for self employed individuals where no documents went directly to the SSA as the IRS must report the earnings to them.