Members of the Maryland Association of Certified Public...


March 31, 1995

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: My job was eliminated, and I opted to take my 401(k) in a lump sum in order to roll it over into an IRA. When I received my check, taxes had been withheld. I rolled over the full amount into an IRA, making up the difference. How do I report this on my income tax so I get back the money that was withheld?

A: If you rolled over your IRA within 60 days of receiving your check, you can recover the amount you paid for taxes withheld by reporting the transactions on lines 16a and 16b of your Form 1040. For example, if the total amount of your 401(k) before tax withholding is $100,000, enter that amount on line 16a. Your employer would have withheld 20 percent, or $20,000. Add the amount you rolled over -- $80,000 plus the $20,000 additional rollover contribution, and subtract that total ($100,000) from line 16a.

This computation results in no income to report on line 16b. This means you will not have to pay taxes on the amount you paid to replace the taxes your employer withheld, and you will receive credit for the taxes withheld.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

To submit a question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford 836-5028, and in Carroll 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear a tax tip. Selected questions will be answered in the Business section. No questions will be answered by phone. Please leave your name and phone number.

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