AboutHelen P. O`Planick, EA Expertise I am a tax professional, with experience in individual taxation. I would prefer not to answer questions about non-resident aliens or corporate taxation. Please do not ask me state related questions, unless the state is Pennsylvania. There are 42 taxing states and 42 TOTALLY different sets of state tax law.
Experience I have been preparing tax returns almost all my life. I have been in professional practice for 25 years and I am enrolled to practice before the Internal Revenue Service.
Organizations National Association of Enrolled Agents
Publications I am a prior Money Magazine Tax Test taker and have been quoted extensively in all media including monthly periodicals and books by tax authorities.
Question As part of my settlement, I was entitled to a percentage of one of my
husband's IRAs. It was a SEP IRA and in our decree I was awared a certain
percentage of it. THe decree says "This is to be a tax free division of this
asset.Each party shall be responsible for all state and federal income tax
liability attributable to their repective separate shares of this account."
I am not yet 50 yrs old, have owned a home with my now ex-husband for the
past ten years, am buying a different home soon and will need the money to
close on it until we can sell the marital home. I am in grad school. How do I
avoid paying penalities on this money (when I withdraw
it)? Is using it for tuition and books the only way? Since I am going full time
to school, can I also deduct living expenses, such as groceries, gas, maybe
part of my mortgage--even though I don't live in a dorm ( l will live in a
small house with my child.)
Answer Any money that you do not roll over into an IRA is taxable. Money used for education (education costs, NOT living costs) will not be subject to the 10% penalty if you take the money out of YOUR IRA (after the rollover).
If you keep money out and don't roll it over, that money will not have a 10% penalty attached, but once you put the money in the IRA, unless withdrawn for specific items (such as education costs) you not only pay tax, but a 10% penalty.
You do not qualify for the first time homebuyer's exclusion either as you now own a home.
