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IRA Early Withdrawal Penalty

  • 1.  IRA Early Withdrawal Penalty

    Posted 10-05-2018 15:50
    A client (under 59 1/2) takes IRA distributions.  His AGI is Zero or very low.  He has $20,00 of Medical Expenses, so I assume I'm safe reducing his IRA distributions by the $20,000.  But this client is also a 41.5% shareholder of a nonpassive LLC.  On his K-1 lists $17,000 Ordinary Business Income, $31,000 Guaranteed Payments, and $31,000 Medical Insurance (obviously, the same monies as the Guaranteed Payments.  Can I use those $31,000 medical expenses to offset the IRA distributions?  If not, What if I move those medical expenses from an Adjustment to Income to Schedule A Medical Expenses?  Is there an issue because the Medical Insurance premiums are technically paid by the LLC?  Is there a workaround?

    Thanks in advance!
    -Marc

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    Marc Lusthaus
    CPA
    ROBERT S. LUSTHAUS, CPA PC
    Plainview NY
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  • 2.  RE: IRA Early Withdrawal Penalty

    Posted 10-10-2018 11:08
    Marc:

    The health insurance premium would offset the guaranteed payment and there would be no additional deduction.

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    Robert Brown
    ROBERT N. BROWN, CPA
    Jericho NY
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