What must Joan do for her 2017 tax return when she withdraws $10,000 from her retirement account?

What must Joan do for her 2017 tax return when she withdraws $10,000 from her retirement account?

• A. Report the entire amount of $10,000.
• B. Not report anything due to being over age 59½.
• C. Not report any amount as it was not from a Roth IRA.
• D. Report the distribution and elect the ten-year option.

Answer: (A)

When Joan withdraws $10,000 from her retirement account for her 2017 tax return, she must report the entire amount of $10,000. This is because distributions from retirement accounts such as traditional IRAs or 401(k)s are generally considered taxable income in the year they are withdrawn, regardless of the account type or Joan's age at the time of withdrawal. If Joan were under age 59½, the withdrawal would typically be subject to an additional early withdrawal penalty, but since the scenario does not specify her age at the time of the withdrawal, the primary requirement is that the entire withdrawal amount must be reported for tax purposes. It's important to note that, while certain conditions may allow individuals over 59½ to avoid penalties on distributions, it does not exempt them from reporting the income on their tax return. The other options suggest scenarios that either misinterpret the reporting requirements or imply that certain conditions would exempt Joan from her obligation to report the distribution. However, the correct course of action remains that all withdrawals must be duly reported as part of her taxable income for the year the funds were taken from the account.

When Joan withdraws $10,000 from her retirement account for her 2017 tax return, she must report the entire amount of $10,000. This is because distributions from retirement accounts such as traditional IRAs or 401(k)s are generally considered taxable income in the year they are withdrawn, regardless of the account type or Joan's age at the time of withdrawal.

If Joan were under age 59½, the withdrawal would typically be subject to an additional early withdrawal penalty, but since the scenario does not specify her age at the time of the withdrawal, the primary requirement is that the entire withdrawal amount must be reported for tax purposes. It's important to note that, while certain conditions may allow individuals over 59½ to avoid penalties on distributions, it does not exempt them from reporting the income on their tax return.

The other options suggest scenarios that either misinterpret the reporting requirements or imply that certain conditions would exempt Joan from her obligation to report the distribution. However, the correct course of action remains that all withdrawals must be duly reported as part of her taxable income for the year the funds were taken from the account.