Tax Law (Questions About Taxes)/Gift


QUESTION: I am receiving a pension soon from 20 yrs of being a Volunteer Firefighter. If I take the money and put it into some type of IRA I will not be taxed on that money if I keep it in there until age 59 1/2. (I:am 50 now) If I want to use that money now, the IRS is going to take a giant chunk of it. My question is: Can I give this money to my wife as a gift and not be taxed? What other recourses are available to me so I can use the money now when I need it and not lose a ton of it to the IRS?

ANSWER: Christopher,

Thanks for your question.

First, let me give you a clarification.  You will pay tax on it now or later.  However, if you withdraw it now, it will be subject to a 10% penalty in addition to the tax.  If withdrawn after age 59 1/2, you will still owe the tax but not the penalty.

Gifts are not tax deductions, so giving it to your wife would do nothing to change your tax liability.

There are no options to avoid the tax.  You are receiving a pension, it will be taxable income when it is withdrawn.  

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: That is differant from what I've been told. I was told if you don't take it out until your 59 1/2, you would not pay taxes on it. Also, does the 10% penalty apply to Volunteer firefighters? There is some chatter going around that the Releif Assocation does not think that it applies to us.

Thanks for the help- looks like running into burning buildings wasn't all that it was cracked up to be in the eyes of Uncle Sam!!

I am unaware of any provision in the tax code that make such a pension tax free.  There are no exceptions for firefighters from the penalty.

This from the IRS website.,-State-&-Local-Governments/Issues.

Hope this helps.

John Stancil, CPA  

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John Stancil, CPA


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 am Professor Emeritus at Florida Southern 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 CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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