Armstrong Financial Strategies
Morris Armstrong founded Armstrong Financial Strategies in 2001 as fee-only firm. The firm does not accept commissions or referral fees and the only source of its income is from the client. Morris has taught at Marymount College in Tarrytown, NY and has written extensively on the subject of investments, taxes and planning for Multex Investors, which Reuters purchased in 2003.
Morris has also been active in the field of divorce planning, and in 2008, the Connecticut Law Tribune recognized his efforts. The lawyers in the state voted him as one of the top three planning firms in the state.
Morris has written for and been quoted in numerous publications including the Wall Street Journal, New York Times, Financial Planning magazine, Wealth Manager Magazine and Yahoo Finance. His investment philosophy has been shaped by both John Bogle and Eugene Fama, and is his portfolios, which are a blend of passive and active vehicles, reflect this.
While he enjoys divorce planning, it can be draining and he prefers not to work with those couples who believe that “War of the Roses” was a manual for divorce. He enjoys his role as an Enrolled Agent helping people resolve their issues with the IRS, whether it is a notice or something more involved such as an audit or offer in compromise.
BBA, Banking, Pace University
Assets Under Management:
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The 10% penalty is imposed by the federal government and if the annuity is within a qualified plan, you should be exempt from that. However, keep in mind that there may be penalties imposed by the insurance company that issued the annuity. I suggest that you speak with them.
It would not fall under the 1031 rules because you own the other properties already - there is no acquisition being made. Furthermore, self-dealing usually disqualifies many strategies.
It may very well be correct and you have stated that it is a traditional IRA, as opposed to a Roth IRA. The next question is, did you take a tax deduction on your previous tax returns? Your tax return should include a form 8606 and that shows how you are classifying your IRA contribution. If you elected to make it a non-deductible IRA, then your basis is $10,000 and you will owe tax on the $5,000. If you did deduct your contributions from your income in those years, then your basis is zero, and that results in your having $15,000 taxable income.
The 1099R most likely says taxable amount not determined and that is because the bank may have no idea on whether or not you took the deduction on your taxes when the contributions were made.
Even if the outcome is not what you hoped for, I hope that the answer was helpful to you.
Your 2016 tax return will need to include your Social Security benefits received in 2016. You cannot adjust that for money repaid in 2017. However, the procedure that you need to follow will depend on how much money you are repaying in 2017.
If you are paying back $3,000 or less, then you deduct the repayment on schedule A, under miscellaneous deductions subject to a 2 percent threshold.
If you are repaying more than $3,000, you have the choice of reporting it on schedule A, under miscellaneous deductions NOT subject to the 2 percent haircut or claiming a credit. You would claim the credit by comparing the tax liability for 2016 with and without the Social Security amount and then placing the difference on line 73 of the form 1040, using the notation IRC 1341.
Do not forget to adjust your state return as well if applicable.
You will have received a 1099SSA showing the amount of benefit repaid and that will be your source document.
If your only income is $27,200 dollars, you should have a very small tax issue. As head of household, with a disabled dependent, your standard deduction is $10,850. You have three exemptions which are worth $12,150. These two amounts are $23,00 which is subtracted from the $27,200 giving you $4,320 of taxable income. That may be taxed at 10 percent.
However, there may be other issues that you have not stated, such as the ages of the people involved and any other benefits that you may be getting which could impact your tax situation.
You have not listed any earned income so there is no EITC issue. The amount of your refund will be determined by how much money you have had withheld, reduced by the tax on your taxable income.
I know this is general, but hope that you have found it helpful.