Dan Pilla's "Pilla Talks Taxes" (Monthly Electronic Newsletter) *

Dan's information-packed newsletter "Pilla Talks Taxes" has been in continuous publication since 1988. Now, it's in electronic form. If you want the truth and nothing but the truth about the latest on what the IRS and Congress have in store for your taxes and how you can protect yourself, you need this newsletter. Stay current on new laws, strategies and defenses that show you how to protect and defend your rights, new ways to cut your taxes and how to avoid problems with the IRS. If it is important for you to know, you will find it in this monthly newsletter! You'll see what's going to happen before it happens. You'll survive--even prosper--when others fall victim to ignorance. An e-mail address is needed to order this newsletter.

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 This Month's Featured News Story 

PILLA TALKS TAXES' Featured Article

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WHAT EVERY CITIZEN NEEDS TO KNOW

ABOUT RETUREMENT FUND DISTRIBUTIONS

 

The Tax Consequences of Taking Your 401(k) or IRA

 

I can’t count the number of times people have told me that the reason for their delinquent tax debt is that they took a retirement fund distribution and didn’t realize the extent to which it was taxable. They might claim that “withholding” was taken from the distribution which they “thought was enough to pay” what they would owe. As it turns out, that was not the case. Often, no taxes whatsoever were paid on the distribution. 

In one case, my clients took out about $350,000. The plan administrator withheld 20% for federal taxes (absent specific instructions from the client), and sent the remaining balance—about $280,000—to the clients. They then used the money for all manner of spending. They made substantial repairs to one child’s home. They spent money on an elaborate vacation for the kids and grandkids (about twelve in all). And, they paid off substantial credit card debt for themselves and their kids. At the end of the spree, the money was gone—all of it. 

When their tax return was completed the following spring, they experienced the worst kind of sticker shock. As it turned out, the 20% withholding of about $70,000 was well under the federal income tax hit, which alone was about a third of the total distribution, not to mention the state tax obligation on top of that. Considering that the early withdrawal penalty (if applicable) on a typical retirement plan distribution is 10% by itself, the $70,000 of withholding was less than half the total tax on the distribution. 

Why did this happen? And why does it happen so often? 

  Read the entire articleRead more of this article 

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ARTICLES FOUND IN THE LATEST PILLA TALKS TAXES ISSUE: 

 

WHAT EVERY CITIZEN NEEDS TO KNOW 
ABOUT RETIREMENT FUND DISTRIBUTIONS

The Tax Consequences of Taking Your 401(k) or IRA

THE FIFTH AMENDMENT UNDER ATTACK
Understanding the "Required Records Exception"
by Scott MacPherson, Attorney at Law

 

LOOKING TO STAY CURRENT ON THE LATEST TAX CHANGES?

Dan Pilla' monthly newsletter, Pilla Talks Taxes, features news stories and developments in federal taxes that effect your pocket book. Each information packed issue shows you how to use little known strategies to cut your taxes, protect yourself from the IRS, exercise important taxpayers' rights and keeps you up to date on the latest trends in Washington on the important subjects of taxes and your rights. You can't afford to miss a single issue!

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