Thursday, February 13, 2014

IRS+IRA+RMD=PITA

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While I may strongly disagree with some of the programs my taxes support, I’ve never resented having to pay my income tax.

Not really…at least, not much.  Over the years, I did have a couple of unhappy disagreements with the IRS, but generally the Tax Day experience  has been painless.

Last year was the easiest return I ever prepared. There were no W-2s and just a handful of 1099s from Social Security and a couple of pensions.  It’s not much of a simplification to say no (taxable) income equals no taxes owed. 

This year I expected another walk-in-the-park, no-brainer, carbon copy of last years return.  If only life were ever that simple – and it would have been except that last year I turned 70 1/2.  That means I was required to take a RMD (required minimum distribution) on my IRA.

It wasn’t a lot of money - certainly didn’t change our lifestyle – but it was just enough to cause me to owe taxes this year.  The good news (if there is any) is that I am due to take this year’s RMD just in time to pay my taxes.

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