I can’t remember if I brought this up before. It was during tax season and I didn’t have much time to deal with it. Taxpayer is 74. In February of 2007, he cashed out an annuity that was an IRA rollover from a pension plan. Of course, he never checked with anyone and went to the bank and put it in a CD, not an IRA account. The bank never questioned him just took the money. Of course, I go to do the tax return for 2007 and have to pick it up as all taxable income. Taxpayer doesn’t understand why it is taxable. I talked to the company who had the annuity and they told me that they had sent him information about the possibility that it might be taxable and he needed to talk to his accountant. He didn’t pay any attention to the letter because he didn’t understand it. I talked to the bank to see if there was any way they could change the account to an IRA rollover but of course that was a no. So client payed the tax. I have now lost the client because he found someone who amended the return to show it was rolled over. I don’t understand how that can be but I’m wondering if there was anything else I could have done. Any ideas?
Sincerely,
Debbie Wilson EA
Preferred Accounting
420 E Beloit St.
Darien, WI 53114
262-724-3635 Tel
262-724-5645 Fax
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