IRS and Retirement?

Question

my mom gets retirement for around $610 a month. For 2 years we didn't even know that we had to file the retirement on her taxes. Now because of this, my mom has gotten charged $1300 for not paying it, then maybe a few months or more later she has gotten charged $1400. Is this suppose to be interest and penalties.

Also the $1300 came from one state and the $1400 came from another state.

My questions are, why are the payments so high and why are they coming from 2 different states.

Also what are the tax payments on the retirement suppose to be.

If you can't answer the questions, is there a way i can email the IRS about this. My mom tried calling them but she said she wasn't going to wait 30minutes or more for them to finally pick up and answer.

Answer 1

Retirement income is taxable unless the taxpayer paid his own after-tax money into the retirement plan. Usually, the payments are fully taxable.

Persons receiving retirement income are given a 1099R each year from the financial institution issuing the payments. That document shows the taxable amount, or provides information that allows the taxable amount to be figured.

Your mother had two years of monthly payments of $610 that were taxable. This is close to $15,000 of taxable income. It is not surprising that the tax due is $1,300.

If your mother needed to file tax returns for two different states, those returns are going to need to be amended. The amendments can't be done until the federal returns have been amended, whether or not those returns are actually filed.

If there are two state returns needed for the same year, credits may be applied from one state to the other. The retirement income will only be taxed in the state in which she resides.

Sounds like you have enough of a mess here where you should take your old tax returns, your retirement income documents, and any correspondence from the federal and state revenue offices to a tax preparer who can straighten it out quickly to minimize further penalties and interest.

Answer 2

First of all, you say these came from states, so it has nothing to do with the IRS, that's for federal taxes. So there's no point in contacting the IRS about them, since the bills are not from them.

With a pension of around $610 a month, your mom would be under the limit for owing any federal income tax or for having to file a return, unless she has other income that you don't mention.

States can have different limits. Many states don't tax pensions. You say the bills are from two states - did she move? Since you don't say where she lives or what states these bills are from, can't answer your question.

Answer 3

Retirement that you did not contribute to is fully taxable by the IRS and the state you live in. You are not very clear about where these bills are coming from. You should only get one from the IRS and you may get one from each state where she lived while getting retirement.

You will have to phone the IRS and wait. There is no way to have a conversation with email.

BTW: Part of social security can also be taxable if the total income for the year is over a limit. You should also check into that.

You should be able to get the people giving the pension to withhold federal and state tax. If they won't do it you may have to file quarterly estimates.

Answer 4

Your mom needs to talk to a customer service representative who can pull her account up on their computer to properly explain the reason behind the balance that she owes, they can not discuss Tax Account information via the internet or email. She can try the 1-800-829-1040 number or 1-800-829-0922 (this 2nd number should get her to a CSR quicker)

They can advise her how to have Federal Taxes withheld from her retirement funds.

Answer 5

Hire a tax professional. There is no way she should owe this much in taxes. Also, most states will allow for an offer in compromise that usually will result in a substantial savings.