Q. New Jersey flagged my income tax return, and now four months later, has informed me that I owe them some money based mostly on my withdrawals from mutual funds. Since these withdrawals were from Roth IRAs, I disputed the decision online, and received a message that it should be another three months before I get an answer. Meanwhile, the amount they have assessed me is due in one month. The question is, do I pay up now, or can I wait past the deadline for the final decision?
— Gearing up to fight
A. That’s a tough one. You don’t want to get stuck with more penalties and interest.
But let’s talk about why it’s possible the Division of Taxation is right.
For starters, a qualified distribution from a Roth IRA does not have to be included in your New Jersey income in the year received, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.
A “qualified distribution” means a payment distributed after a five-year waiting period, which begins with the first tax year for which a contribution was made to an individual’s Roth IRA, he said.
Other requirements for a qualified distribution include payments made on or after the date the individual reaches age 59½.
If you made a Roth distribution before the five-year waiting period or before you turned 59½, then New Jersey as well as the IRS have a right to tax the distribution, he said.
“If you feel you are right in this matter, I would recommend you not pay the state at this time,” Kiely said. “If you pay the tax and penalty now, you might not get it back. It’s too easy for the state to say you were wrong — case closed. If you ultimately lose, then you pay what they want.”
Email your questions to Ask@NJMoneyHelp.com.
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.
"pay" - Google News
August 27, 2021 at 04:31PM
https://ift.tt/3Dm7GEL
N.J. says I owe more taxes. Should I pay while I fight? - NJ.com
"pay" - Google News
https://ift.tt/301s6zB
Bagikan Berita Ini
0 Response to "N.J. says I owe more taxes. Should I pay while I fight? - NJ.com"
Post a Comment