@nettmann wrote:
@Chris1976 wrote:
Sorry but I am livid! We took out money due to Covid and spread it over three years on our taxes. Last year when we filed, we got a refund. This year it says we owe. WTF? The income amount from last year and this years is basically the same including the 1/3. What did I do wrong? How many times do they get to tax us on OUR money? Can someone explain why I would owe this year but not the first year I filed. TIA. Should I talk to a tax professional?
If the IRA distribution that you receive in 2020 and chose to split it for three years was pre-taxed, then Your 2020 return was only taxed for one third of your distribution and the remaining tax on the two third of it that was withheld must have refunded to you when you filed in 2021... Now for 2021 you owe the tax on the second one third of your 2020 distribution...
Also if there was tax withholding in 2020 (box 4 on your 2020 1099-R) then that cannot be split and carried to 2021 but would be applied to 2020 tax and could add to the 2020 refund. There would be no similar tax withheld for 2021 so you would need to make 2021 estimated tax payments to account for it so there would not be any underpayment penalty.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
