Retirement 101

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 I am not a financial expert. The whole subject of taxation confuses/bores me but I realize it is a necessary evil to know something about it. I write about it mainly to remember what has happened, but perhaps someone else can be spared some pain by reading of our experience.

If you are blessed with work during your life and have been able to put any of it into savings, there will come a time called retirement (age 72) when the government says you have to start using this money. You must take out a certain percentage of your savings every year, called an RMD or required minimum distribution. If you don’t get the hang of it the very first year, you are given a little mercy – if you apply for it. It’s almost a “given” and happens to people all the time. It happened to us. I think I’ve written about it already.

2016 was a year for mistakes. We missed the RMD by four days for one, and we also made a mistake in figuring what we owed. As a result the IRS punished us with a penalty –  50% of what our RMD would have been. When we discovered what had happened, we hired a CPA to submit an amended return for 2016. He also discovered our mistake which resulted in us being owed a return for that year. No one was alarmed at this point. It was expected that we would be forgiven the penalty for the RMD.

We started getting letters telling us to pay our penalty. They were counting the days we were “overdue” and charging interest on the debt. Twice over a period of several months our CPA called the IRS hotline, explained the situation and was told that since the amended return had been filed they would eventually get to it. We could ignore the letters. They said they put a hold on any further action and wouldn’t be bothering us about the matter.

But the letters didn’t stop, and the amount they said we owed kept climbing. Finally one day we got a notice that since we hadn’t paid, the IRS was going to start taking it out of our social security checks. Yes, they can do that. Once again, our CPA spent a couple of hours on the phone trying to find out why this was happening. The IRS couldn’t locate our amended return. One office had sent it to another and in between, it disappeared. It was resubmitted immediately and once again we were assured that any action against us would be put on hold. Nevertheless, money was taken out of the husband’s SSI check that month.

Our CPA had decided to get an extension for our 2017 taxes. He reasoned that we should get 2016 out of the way first, especially since the IRS didn’t seem to be getting the message that we didn’t owe them anything. We were due a return for 2017 and he was afraid they would take it. By this time, he had gotten a tax advocate for us – a person who almost walks your return from office to office until it is resolved and no longer a problem. His extensive conversation with the IRS gave him assurance that it would be okay to file for 2017. There would be no action to take the return we were owed.

Today we got a letter saying they took our 2017 return and applied it to our “debt”. It’s beginning to seem like the only sure thing is that they WILL DO everything they say they WON’T DO.  I feel like my favorite government agency has me on a hit list. In their defense, I have heard that they have had severe budget cuts and have way too few employees. But how is this ever to be solved? We pay a lot of tax – it’s not like we are paying less than we owe.

I’m just saying, if this ever gets straightened out, I’m throwing a party. #frustratedtaxpayer

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