Your 2015 Tax Returns: Be Aware As You Prepare

2015 Tax FilingTax season is upon us and my clients are discovering a whole new world of confusing regulations and complex forms.

Here’s some help in  managing your return for the 2015 tax season.


Unfortunately tax rules change constantly, making tax filing even more stressful, especially for uninformed clients. Here are some tips, ideas, and information that might help you with your 2015 returns and give you some talking points for managing taxes throughout the year. Keep in mind, the deadline for most 1099s and 1098’s and other tax information you may receive from your custodians is February 29, 2016.

  1. Later filing date – April 18, 2016.   Believe it or not emails are paid today is the official holiday in the District of Columbia and this year it falls on April 15. Therefore US taxpayers in all 50 states will be granted an extra few days to complete the returns in 2015. Those of us in Maine and Massachusetts however will have until April 19 to file their tax returns, as Patriots’ Day falls on April 18 in
  1. Higher Roth IRA limits

Although our IRA contributions remain unchanged at $5,500 per person, (and $6,500 for individuals age 50 and older), if your income does not reach a certain threshold you will be able to contribute to your Roth up until April 18, 2016 (see table below). 

Table 1-Retirement Plan Contribution Limits

Here's a TipIf your income is more than the thresholds for Roth IRA, you could contribute to a traditional IRA and then convert to a Roth IRA which would save you and your heirs a lot of money in the long term.


3.  You may have to fix misleading or missing tax reporting from your IRA custodian tax statements.

Sometimes I am asked to help my clients avoid any penalties and to pay the right amount of tax by working with their tax preparers to adjust IRA basis, and address unreported rollovers. Generally, even though your custodian may have properly filled out form 1099–R, corrections may be necessary. (For the purposes of this bulletin, I’m not going to get into mistakes that arise from the “nondeductible IRA” distribution issues since it does not affect the vast majority of my clients. But, I would be happy to discuss it if you think you have a problem in this area.)

4.  Correcting a wrong code in Box 7 of Form 1099-R

As you may know distributions taken before an IRA owner reaches 59 1/2 are considered early distributions and subject to a 10% early distribution penalty unless an exception applies. IRA custodians are required to import a coding box 7 to let the IRS and other interested parties know the type of distribution and whether or not it would be subject to the 10% early distribution penalty. If the code on your 1099 is not correct your tax preparer should file an IRS form 5329 to override the code, unless the IRA custodian can make the correction. By the way, exceptions to the penalty for these early distributions are first-time home buying, medical expenses, health insurance premiums, and qualified higher education expenses.

5.  Offsetting rollovers that are not reported

Distributions are properly rolled over are nontaxable and continue to be tax-deferred. IRA custodians are required to report rollover contributions on IRS form 5498.  This form for (some crazy reason) is required to be issued by May 31 which is usually after you file your individual tax return in April.  However, form 5498 is not required to be filed with your tax returns. Keep in mind, the IRS considers a distribution from an IRA to be funds that you received and did not return to your IRA within a 60 day grace period. Rollover contributions usually in most properly occur from custodian to custodian, with the account owner never receives funds.  However, mistakes are made and need to be corrected. Let me know if you suspect that something is being misreported.

IRA Rollover DogPlease download the full report to review the Addenda on Rollovers vs. Transfers, Asset Managemet Fees, and Custodial Fees

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