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Tax Fraud - Abusive Roth IRAs
Don't listen to bad advice concerning your Roth IRA or you could wind up in a world of hurt
There are some new items on this years IRS "Dirty Dozen" Tax Scams for 2007 and one of them
concerns the popular Roth IRA. A "Roth" IRAs is an IRA that allows for tax-free withdrawals
as long as the contributions remain in the account for five years, and the account holder
meets on e the of the following: age 59 1/2, death, disability or first-time home purchase.
There's nothing fishy about Roth IRAs in general. For many a Roth IRA is the only way to fly
and, when the rules are followed, the IRS has no problem with them. This year the IRS has seen
enough cases of Roth IRA fraud to put it on the the Dirty Dozen list list. This is what they
had to say:
Abusive Roth IRAs:
Taxpayers should be wary of advisers who encourage them
to shift under-valued property to Roth Individual Retirement Arrangements (IRAs). In
one variation, a promoter has the taxpayer move under-valued common stock into a Roth IRA,
circumventing the annual maximum contribution limit and allowing otherwise taxable income
to go untaxed.
Don't listen to bad tax advice!
People selling this kind of idea don't have a lot at stake themselves. They're just peddling
books and investment programs. Identifying the ones that could land you in hot water is your
job. When you file your taxes you sign on the line and take responsibility for what you're
sending the IRS. You can't blame the shyster that sold you on the idea in the first place.
Before trying something like this ask a friend who you respect and trust or a professional
accountant. Getting bad tax advice is a classic. Don't become someone elses cautionary tale.
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