Sau wing questions and answers

. Yesterday, i got a call from my bank fraud department. They said that there had been a couple of transactions occured under my credit card. They called me and verified with me to see if I did that. In one of my recent statement, i just found out that there was about $7000 money transfer to unknown place. Two weeks later, the same amount of money was credit back to my account. Actually my bank will send me affadict statement to fill in.

Now i am concerning about my personal information may be stolen. I heard that you have some information that may be usefull for me. I would be appreciated if you can email to me. Thank you.

2. My friend was a first time home buying, he had taken out the money from his ira account. We all know that it won't be any penalty for the first time home buyer. He said that he had informed to the bank that he was using the ira money for their first home. He got a form from the bank and saying that they withdrew the money from the ira account without indicating that was for first home buying. My friend has tried to talk to the bank and ask them to revise but they refuse to do so. His accountant just kept on saying the bank had to revise the statement. He had filed tax return extension. Under his condition, what is the best way for him to do? Can you suggest?

ans

2. The lifetime limit is $10,000 (First time home buying withdrawal from IRA without penalty).

Banks have no way of ensuring that the money is used for first time home buying. So they usually do not put down code 2 (early distribution, exception applies (under age 59-1/2) on box 7 of 1099-R. There is no way he or his accountant can force the bank to do it. Instead the bank usually put down code 1 (early distribution, no known exception). It does this to protect itself in case the money is not used for whatever purpose you claim to use.

Rather than just pressing your friend to get something that he has no control over, his accountant can still handle the tax return properly even though code 1 is shown on box 7. What he should do is to fill out Form 5329 and indicate on the form that an exception to the penalty tax applies (line 2, Part 1 of Form 5329). The exception number to enter on line 2 in this situation is 09.

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