01-15-2005, 06:04 PM
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 Re: SEP IRA - Fed & State? Taxes "Retro-Bob" <uctraingSPAM-ME-NEVER[at]ultranet.com> wrote: - quote - > I have a SEP IRA that was paid for (mostly) by my sole prop.
You're right, you need to see someone. The rules for Fed> That money was exempt from Federal Taxes. As I do an > (early) withdrawal it is obviously subject to tax as income. > It was already taxed by the state (MA) since MA does not > allow deductions for IRA's. > There is also a chunk of my SEP that was paid for by my > Corporation. This money was not taxed by the feds *or* the > state since it came off the Corporate return as an expense > and was essentially invisible to both the state and Feds. As > I pull from this money (early) I assume that state tax would > be due since it was never taxed as income to me. > As I pull money (early) from the SEP, can I determine that > it is taxable in the order contributed a la FIFO ? That is, > the early contributions (withdrawals) are non-taxable in MA > as they were already taxed under the sole prop and the later > withdrawals - if they happen - will be taxable to the state? > Or, is there a formula or precedent for how I must > proportion it ? Also, if I get to the point of pulling out > earned income (taxed by no one), how would that figure in to > the state return? > Thanks for any pointers... if this is not simple i.e. "you > need to see a CPA" that's fine... but I took an early > withdrawal for 2004 which I need to pay Fed taxes on this > weekend and I just thought of the State issue with the Corp > tonight (so I am trying to figure out if I need to send them > a check this weekend). and MA are not the same, nor are they easily understandable. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062 www.woods-financial.com << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
01-14-2005, 11:34 PM
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| SEP IRA - Fed & State? Taxes I have a SEP IRA that was paid for (mostly) by my sole prop. That money was exempt from Federal Taxes. As I do an (early) withdrawal it is obviously subject to tax as income. It was already taxed by the state (MA) since MA does not allow deductions for IRA's. There is also a chunk of my SEP that was paid for by my Corporation. This money was not taxed by the feds *or* the state since it came off the Corporate return as an expense and was essentially invisible to both the state and Feds. As I pull from this money (early) I assume that state tax would be due since it was never taxed as income to me. As I pull money (early) from the SEP, can I determine that it is taxable in the order contributed a la FIFO ? That is, the early contributions (withdrawals) are non-taxable in MA as they were already taxed under the sole prop and the later withdrawals - if they happen - will be taxable to the state? Or, is there a formula or precedent for how I must proportion it ? Also, if I get to the point of pulling out earned income (taxed by no one), how would that figure in to the state return? Thanks for any pointers... if this is not simple i.e. "you need to see a CPA" that's fine... but I took an early withdrawal for 2004 which I need to pay Fed taxes on this weekend and I just thought of the State issue with the Corp tonight (so I am trying to figure out if I need to send them a check this weekend). Thanks, << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| fed, ira, sep, state, taxes |
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