The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: IRA distribution mess||Date: 2/9/2001 8:37 AM|
|Author: euphoriant||Number: 46021 of 121061|
What happens if several years ago contributions were made to a traditional IRA account but never deducted on the tax returns? It's been over 4 years so I guess it's too late to ammend them.
If it's too late to amend the return, then you lost the deduction (or your grandmother lost the deduction).
Now my mother (age 63) withdrew the funds and they appear to be fuly taxable as current income. This equals double taxation on the money ($12,000). Right?
I think that the principal when withdrawn is not taxable, even if it wasn't deducted (or deductible). Please read the IRS publication because I think you will find this very helpful. I'm sorry that I don't know the rules better, but I don't think you're out of luck.
Would the bank have a history going back maybe 10 or so years with deposits and interest?
I believe they do, but please keep in mind that they will charge you for this service.
Good luck and visit the IRS website for the publication (sorry I don't know the pub #s).
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