AboutJohn Stancil, CPA Expertise I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants.
Visit my website at www.johnstancilcpa.com.
Also visit my blog, www.thetaxdocspot.com.
Experience I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper. I have prepared taxes for over 30 years.
Education/Credentials DBA University of Memphis
MBA University of Georgia
BS in Accounting Mars Hill College
Question mom will receive brother's retirement investment thru his work. he died. she is beneficiary. she is 80. he lived and worked in a different state than mom. mom receives social security and her husband's pension. with this inheritance, she will make more than 25,000 this year. are there different types of income that won't affect her social security or is it strictly the dollar amount? she is too old to roll this money into an IRA (i understand she would have to be younger than 70 to have an IRA). the state retirement system where this money is, says they will take out 20 percent for federal taxes. this seems high. is that normal?
also, if she gave money to her only remaining child (me) would that lower her income? and possibly any taxes owed? is it $12,000 she is allowed to give her children? can she give this money to any one else to help lower her tax responsibility? whoever she gives money to, particularly if she gives to her child, will that child be responsible to pay taxes on the $12,000 even though taxes have been paid thru the state keeping 20% of the money?
i'm not sure whether to contact an attorney or a cpa.
would appreciate any direction.
thank you.
Answer Kitty,
Thanks for your question.
First, giving you some of the money would do nothing to affect her tax liability. Gifts are not deductible for income tax purposes.
Second, 20 percent withholding is standard in this type of situation. However, she may be able to file documents with the retirement system for less withholding - they may or may not allow it. The state is not keeping that - it is federal withholding she will report on here 1040.
Third, Due to her age and the type of income, the amount of her social security benefits will not be affected. However, since it is taxable income, it may affect the amount of SS that is taxable.
I see no need for an attorney, a CPA or enrolled agent might be useful in preparing her tax return. But as far as tax planning you don't have any options.
