Posted on 04/22/2018 12:37:24 PM PDT by 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.
I’ve thought about Cobalt or Titanium Futures. But not on my budget. Thinking about it is not always actually doing. The potential for gain is high.
I’m not nearly ready for the Margin Calls on such Options and may never be.
“you owe Nothing, the exemption is in the Milliions”
For 2018, the estate and gift tax exemption is $5.6 million per individual, up from $5.49 million in 2017. That means an individual can leave $5.6 million to heirs and pay no federal estate or gift tax.
A married couple will be able to shield north of $11 million ($11.2 million) from federal estate and gift taxes. And the annual gift exclusion amount is $15,000 for 2018—up from $14,000 where it’s been stuck since 2013.
This is very good information, and will help me to form certain guidelines of expectation. Some details about the estate, I will not be able to answer for a while. The estate is being handled by my older sister. She and I are not really getting along right now, unrelated to this , so I will wait until the full amount has been paid out before I ask for more specifics.
Easy to liquidate if you need cash.
Easy to hide.
It's been a very good investment over 20 yrs
Can you just stick the cash in your mattress?
by the way, check out if the IRS can “garnish” an “IRA”
If not then open a Roth IRA at Vanguard, fund it with whatever you can afford to let go of and put it into a “Target Retirement Fund”. In your case low risk VTINX.
Mind you you can fund an IRA if you make over a certain threshold so like b4 ..quit screwing around, bite the bullet and make an apnmt with a pro and ask these questions. No HR Bock.
Pay now or pay later.
“The problem with IRS debt is that it never goes away”
Statute of limitations on taxes owed is 10 years from the due date of the return or the date filed, whichever is later.
I’ve had many clients get free of the debt, even for payroll taxes at the ten year mark.
Buy gold.
“IRS can “garnish” an “IRA””
The bad news is yes they can take your IRA. To make it even worse you must pay income taxes on the money they take.
However it is an exemption on the IRS Form 5329 for the 10% penalty for premature distribution.
Interesting. I’ve had real estate clients with federal tax liens that were older than 10 years and they had to be paid in order to sell the house unless it could be shown that seller was selling at a loss and receiving no proceeds.
Can’t feel much sympathy for someone who hasn’t paid back the money he borrowed from the government, or who owes back taxes. Folks need to pay what they owe, rather than me making up the difference!
You need a tax lawyer.
Your dad had to pay the state to die?
Not even California is that horrible.
“has been paid out before I ask for more specifics.”
Possibly the inventory and/or will has been filed in the county courthouse. You can check it and she would not know.
“Statute of limitations on taxes owed is 10 years from the due date of the return or the date filed, whichever is later.”
Dude, you better get a good CPA!
“Only had to pay 4% tax to the state of Pennsylvania.”
That is Pennsylvania’s lowest rate.
The rates for Pennsylvania inheritance tax are as follows:
0 percent on transfers to a surviving spouse or to a parent from a child aged 21 or younger;
4.5 percent on transfers to direct descendants and lineal heirs;
12 percent on transfers to siblings; and
15 percent on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax.
There is no 10% penalty for early distribution as he is over 59.5.
“Statute of limitations on taxes owed is 10 years from the due date of the return or the date filed, whichever is later. I’ve had many clients ...”
I hope you give them better advice than you give here.
In what form is the inheritance? Straight out cash? An annuity (qualified or non-qualified)? A traditional, Roth, or SEP IRA? Stocks or bonds? Gold? Real estate holdings? Have there been earnings on the inheritance since her death, or even before her death (principal and pre-death earnings could be treated differently depending on the investment)?
The status at your sibling’s death would determine how you are treated taxually (like my new word?).
I am a CPA with almost 40 years experience. Actually was a tax law professor at a large university years ago.. retired now but still do IRS Audits and Tax Court Cases.
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