Retirees! The deadline for withdrawing your required minimum distribution is right around the corner: April 1.
Taxpayers who turned 70½ during 2014 must withdraw money - a lump sum known as a required minimum distribution (RMD) - out of individual or workplace retirement plans.
The April 1 deadline applies to 401(k), 403(b), and 457 retirement plans, but not to Roth IRAs. There are exceptions, so check with an accountant.
Ask your broker to calculate the RMD dollar amount, or check your year-end 2014 statement. Or calculate the RMD yourself using work sheets available from IRS Publication 590 online (http://www.irs.gov/publications).
New IRA rollover limit
Starting this year, Uncle Sam allows only one IRA rollover in any 12-month period, regardless of the number of IRA accounts you own.
However, you can make unlimited trustee-to-trustee transfers between IRAs.
There are two ways to move IRA money to another IRA: directly and indirectly. In a direct, or trustee-to-trustee transfer, your broker or administrator moves money from one IRA to another without you, the client, ever touching the money. It can be done without worrying about the once-per-year rollover rule. Try to roll over IRA money directly if possible.
Indirect IRA transfers are now extremely risky, accountants say. Avoid them.
Many state tax authorities install new computer systems that don't work or that break down. Jonathan Barsade, founder of Exactor, an automated sales tax systems firm, says he has seen it all.
One client filed a 2014 tax return that state computers didn't process. His business client began receiving massive penalty assessments, all of which were a mistake.
"In some states, we have to remind the [tax authorities] to pull the funds" from clients' bank accounts, he says.
"The returns have been filed, but the states forget to take the revenue."
Just because you get a tax notice from the state doesn't mean you owe money, adds Barsade, whose firm is based in Philadelphia.
"We grow up with the idea that the government can do no wrong," he says. "A notice must be our fault. But many times, clients owe nothing."