topic How do i show a gift Roth in Retirement tax questions

How do i show a gift Roth

mtate1022 — Tue, 14 Jul 2020 20:27:00 GMT

I work in Japan so all my income is excluded. I have to pay a penalty on the Roth ($600) since it is larger than my income ($0). My parents gave me the Roth. How can I show that gift income?

Re: How do i show a gift Roth

SusanY1 — Tue, 14 Jul 2020 20:42:36 GMT

You can't show gift income as it's not taxable, and if all of your income is excluded you cannot have a Roth IRA. You will need to remove the Roth contribution to not pay the penalty. Be sure to request that the financial institution return it as "return of excess contribution" to avoid additional tax and penalties.

Re: How do i show a gift Roth

dmertz — Tue, 14 Jul 2020 20:56:31 GMT

The deadline for obtaining the return of contribution is July 15, 2020 unless you request a filing extension or file your tax return by the July 15 regular filing deadline, in which case the deadline for obtaining a return of contribution becomes October 15, 2020.

Re: How do i show a gift Roth

mtate1022 — Tue, 14 Jul 2020 22:59:34 GMT

Thanks, but I guess I am looking for a tax system that drives people toward good decisions that benefit us all. Retirement investing is GOOD! Having a rule/policy that ends up having people withdraw retirement funds is BAD! Having a rule that interferes with them make the best choices for themselves and opting for what gets them the lowest tax is BAD, FOR ALL OF US. Having a rule that protects us from NOTHING (someone, god forbid, might start a retirement plan, don't you know how wicked that is) and that punishes parents for trying to help their children learn to save for the future is BAD, and punishes the child for listening is BAD!

Re: How do i show a gift Roth

dmertz — Tue, 14 Jul 2020 23:54:45 GMT

What you are referring to as a "rule" is actually a federal statute, part of the tax code established by federal law, and having a method to be able to correct a violation of that statute rather than incur the excess-contribution penalty is GOOD! In this case, the lesson taught by the parents is that one needs to understand the eligibility requirements before making a retirement contribution, an important aspect of saving for retirement.