Advanced Underwriting Consultants

Question of the Day – April 27

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax questions posed by producers.  Here’s the question of the day.

Question: My client sent a check into her personal IRA account on April 15, claiming a $5,000 income tax deduction on her 2011 tax return filed the next day.  The check bounced, as she found out on April 19.  Can she make good on the check now and still preserve her 2011 tax deduction?

Answer: Unfortunately, it’s too late.  The client needed to deposit good funds into her IRA by the tax filing deadline (April 17, 2012 for 2011 taxes).  Since that didn’t happen, no deductible IRA contribution is permitted for 2011.

There’s a private letter ruling on this kind of situation, where the IRS ruled that an IRA rollover check that was deposited within the 60 day window but bounced was not a proper rollover when the check was replaced later.

Since the client cannot make a contribution for 2011 after the deadline, she will need to file an amended tax return as well.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.