Underestimated MRD


R

Roy Starrin

It appears, as I work on my taxes, that I have underestimated the MRD
on wifes IRA by $6.38. To me, I'm perfectly willing to pay them the
50% penalty of $3.19, if I interepret penalty correctly.
Am I missing anything?
 
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B

Bill

(e-mail address removed) (Roy Starrin) posted:
It appears, as I work on my taxes, that I have
underestimated the MRD on wifes IRA by
$6.38. To me, I'm perfectly willing to pay them
the 50% penalty of $3.19, if I interepret
penalty correctly. Am I missing anything?
Assuming you've done the math correctly, that would be correct. Of
course, you should round down to $3.00.

However, an alternative would be to simply ignore your own calculation,
and don't enter any penalty. The _de minimis_ policy practiced by the
IRS, will likely result in their ignoring such a small amount. And,
given the many potential math error pitfalls, who's to say you actually
did miss the RMD?

(The _de minimis_ logic is that it would cost more in terms of time and
postage expense, than the amount of money involved. I'm not sure what
the current level is, but it was $10, at one time -- according to a
friend who worked at IRS.)

Bill
 
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D

D. Stussy

Bill said:
(e-mail address removed) (Roy Starrin) posted:


Assuming you've done the math correctly, that would be correct. Of
course, you should round down to $3.00.

However, an alternative would be to simply ignore your own calculation,
and don't enter any penalty. The _de minimis_ policy practiced by the
IRS, will likely result in their ignoring such a small amount. And,
given the many potential math error pitfalls, who's to say you actually
did miss the RMD?

(The _de minimis_ logic is that it would cost more in terms of time and
postage expense, than the amount of money involved. I'm not sure what
the current level is, but it was $10, at one time -- according to a
friend who worked at IRS.)
When I left in 1994, the de-minimus amount for a field AUDIT was $100. I
think the IRS raised that to $200 about 2000. $3.00 isn't worth worrying
about.
 

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