Hi All,
I am new to this so I have a few questions.
Recently I have opened up an Roth IRA through Capital One Investing. So far for the 2014 year I have contributes about 4k. The way I was explained this work is that ROTH IRA is post tax so one does not have to pay taxes on the amount contributed and one also does not get a tax brake from ROTH.
However IRS is on my back because they got a 1088-R from CapitalOne that state that I have withdrawn 2500 to pay for a student loan. My question becomes why do I have to record that amount as my income if I already paid income taxes on that dollar amount?
In my case I have gotten a Bonus from work worth about 5k and as we all know IRS loves bonuses and I walked away with 2.6k of the 5k. Few days later I made a one time transfer to my ROTH of 2.5k and three months later I had to withdraw the amount to pay of student loan dept. So IRS wants me to pay more income taxes on the 2.5k. So basically I am getting taxed 75% on my original bonus amount.
All the research I did states that as long as I am not withdrawing the interests I should not have to pay taxes or penalties. I can at any time withdraw up to my maximum contribution for that year. So now I am being investigated for 2014 because I never reported the 1088-R from Capital One since I did not make any of that money with them.
Any tips would be highly appreciated
Thanks in advance
Zipp
I am new to this so I have a few questions.
Recently I have opened up an Roth IRA through Capital One Investing. So far for the 2014 year I have contributes about 4k. The way I was explained this work is that ROTH IRA is post tax so one does not have to pay taxes on the amount contributed and one also does not get a tax brake from ROTH.
However IRS is on my back because they got a 1088-R from CapitalOne that state that I have withdrawn 2500 to pay for a student loan. My question becomes why do I have to record that amount as my income if I already paid income taxes on that dollar amount?
In my case I have gotten a Bonus from work worth about 5k and as we all know IRS loves bonuses and I walked away with 2.6k of the 5k. Few days later I made a one time transfer to my ROTH of 2.5k and three months later I had to withdraw the amount to pay of student loan dept. So IRS wants me to pay more income taxes on the 2.5k. So basically I am getting taxed 75% on my original bonus amount.
All the research I did states that as long as I am not withdrawing the interests I should not have to pay taxes or penalties. I can at any time withdraw up to my maximum contribution for that year. So now I am being investigated for 2014 because I never reported the 1088-R from Capital One since I did not make any of that money with them.
Any tips would be highly appreciated
Thanks in advance
Zipp