Any CPA's In Here?

[ABM]

I have a divorce/IRA question:

I'm going through a divorce. We own two homes in Georgia...one of which we want to sell immediately as part of our agreement. The problem is, we're currently upside-down in the home.

The question is, can we make take a hardship loan against our IRA in order to sell the home? My sister had told me that, in light of the crappy economy, some of the penalty restrictions had been lightened in regards to hardship loans.

Thanks!

 

[tlongII]

Certified Party Animal here.


And sorry to hear about the divorce...

 

[ABM]

Certified Party Animal here.


And sorry to hear about the divorce...

Thanks, man.

16 years.

 

[tlongII]

Probably the main reason why I've never had a desire to get married.

 

[ABM]

Probably the main reason why I've never had a desire to get married.

She found the picture...

 

[EL PRESIDENTE]

yikes! sorry to hear. you still going to HI next week?

 

[ABM]

yikes! sorry to hear. you still going to HI next week?

Unfortunately, nada.

Gonna have to re-schedule independently. Most likely, sometime in late October.

 

[EL PRESIDENTE]

ahhhhh....too bad. I would have found you a new wifey.




hope the process is amicable as can be!

 

[Nate4Prez]

Unfortunately, nada.

Gonna have to re-schedule independently. Most likely, sometime in late October.

That's when I'm going to the Wynn if you still have that offer!!

 

[elcap15]

I am not a CPA but I am a tax preparer.

First of all, a hardship withdrawl is only something you do from a 401k. This is beacuse you have no access to your 401k funds until you seperate from service with that company. There is a 10% penalty in addition to the normal income tax due on the withdrawl. CA also imposes a 2.5% penalty, I am not familiar with Oregontax law.

If you have a traditional IRA, you can take a distribution at any time. You do not have to justify it with anyone. However, you will owe regualr income tax in addition to the early withdrawl penalties (10% FED, probably 2.5% OR)


Now about the actual sale of the house. Are you selling at a loss, or are you actually upside down on the mortgage? There is a difference. Also, has this house been your primary residence or an investment property? If you are underwater on your mortgage, and the bank that holds the note agrees to take back less than you owe them, you will owe taxes on the difference. It is called "forgiveness of debt." Recently, there have certain exclusions implemented so that you do not have to pay taxes on forgiveness of debt for your primary residence.

There is too much nuance to discuss on a forum board and I would advise you to consult a professional. It will be well worth their fee.

 

[JfizzleBlazer]

CPA candidate still taking the exams

 

[ABM]

I am not a CPA but I am a tax preparer.

First of all, a hardship withdrawl is only something you do from a 401k. This is beacuse you have no access to your 401k funds until you seperate from service with that company. There is a 10% penalty in addition to the normal income tax due on the withdrawl. CA also imposes a 2.5% penalty, I am not familiar with Oregontax law.

If you have a traditional IRA, you can take a distribution at any time. You do not have to justify it with anyone. However, you will owe regualr income tax in addition to the early withdrawl penalties (10% FED, probably 2.5% OR)


Now about the actual sale of the house. Are you selling at a loss, or are you actually upside down on the mortgage? There is a difference. Also, has this house been your primary residence or an investment property? If you are underwater on your mortgage, and the bank that holds the note agrees to take back less than you owe them, you will owe taxes on the difference. It is called "forgiveness of debt." Recently, there have certain exclusions implemented so that you do not have to pay taxes on forgiveness of debt for your primary residence.

There is too much nuance to discuss on a forum board and I would advise you to consult a professional. It will be well worth their fee.

Thanks for all of that! Indeed, I'll be consulting a CPA.

Thanks again!

 

[44Thrilla]

That sucks, ABM. Good luck.

 

[jlprk]

I haven't worked in a CPA firm for almost 15 years, so my mind has become a bowl of porridge, and I'm not getting into this thread.