My mom’s estate (401K) makes an annual contribution to a BrightStar account we’ve set up for the kids. The money that went into the 401K is untaxed. Obviously, we must pay taxes on this.
I received a 1099-R from the trust. It appears we should complete a form 5329 - but in reading the instructions, 5329 does not seem to include this scenario. Would it be easier if I just add the 1099R to all my other 1099s and just report it as income?
2006-07-29 16:57:34 · 3 answers · asked by talldorknhandsome 1 in Business & Finance ➔ Taxes ➔ United States
Ok...
1st....If the check was paid out directly to the trust you file IRS form 1041. It goes on the "Other income" line and then you pay the tax or PASS THE INCOME THROUGH TO THE BENEFICIARIES ON A 1041-K-1 FORM for them to report on their own returns.
2nd....No form 5329 is used by anyone as no penalties on inherited IRAs.
3rd...I don't think there is any deduction for an educational 529 plan contribution. I think it's just tax deferred for your student.
disclaimer:....." not meant to be legal advise". Check with your own tax person or call IRS 800-829-1040 from 7 AM to 10 PM. Wait on hold a while and ask for the trust questions dept.
2006-07-30 05:59:29 · answer #1 · answered by Ellie 2 · 1⤊ 0⤋
your best course of action would be to check with an accountant or tax preparer, they could give you the best answer.
2006-07-29 17:01:43 · answer #2 · answered by sgtj01 2 · 0⤊ 0⤋
have your bank take out the tax on the money quarterly, this is easier than yearly.
2006-07-29 17:15:37 · answer #3 · answered by me 1 · 0⤊ 0⤋