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Tuesday May 23, 2017
Phone Scams, IRAs and Tax Extensions
The IRS published multiple reminder letters this week. In IR-2017-64 the Service warned tax preparers to watch for phishing emails claiming to be from clients.
The latest tactic is for a scammer to send an email to tax preparers with a "last minute" request to change the refund destination. The change may be a direction for the IRS to send the refund to a prepaid debit card.
If a tax preparer receives a "last minute" request, he or she should verbally reconfirm the new address or card with the taxpayer.
In IR-2017-63 the Service reminded taxpayers who turned age 70½ during 2016 to take their first required minimum distribution (RMD). The initial distribution must be taken by April 1, 2017.
When you turn 70½, you are required to start distributions from a traditional IRA, 401(k), 403(b) and many other qualified retirement plans. The initial year distribution must be taken by April 1 the year after you turn age 70½. If you take your first RMD for 2016 before April 1, you will be required to take another distribution for 2017 by December 31.
For the first RMD, you will normally use the Uniform Table life expectancy at age 70½. The appropriate percentage will be multiplied times your IRA account balance on December 31, 2015.
Some workers who are still employed may delay their first distribution. This is permitted from selected workplace plans and the first distribution may be delayed until April 1 after retirement.
IRA owners may use a qualified charitable distribution (QCD) to fulfill their RMD. After age 70½, you may direct your IRA custodian to make a transfer directly to charity. The maximum qualified distribution each year is $100,000.
Extensions to file your taxes are available if you cannot complete your return by the April 18 deadline. An easy method is to use Free File and request an extension on the electronic IRS Form 4868. You still will need to estimate and pay your taxes by April 18.
Other options are to pay tax with IRS Direct Pay, Electronic Federal Tax Payment System or a credit or debit card. If you indicate your payment is for an intended extension of your time to file, IRS Form 4868 is not required.
Published March 24, 2017