4 ms·

I have had the IRS charge me tax and accuse me of lying to them over a UTMA withdrawal used to pay for tuition even though the fund running the account refused

I have had the IRS charge me tax and accuse me of lying to them over a UTMA withdrawal used to pay for tuition even though the fund running the account refused to send me the paperwork because the account is in my parent's name first instead of mine. It is a massive organization filled with uncoordinated people doing their level best to produce Brownian motion.

gamblor956 2y ago
UTMA withdrawals by the child are not taxable, however UTMA income is taxable to the child... What exactly are you railing against? It sounds like the IRS is following the rules here.
- kbolino 2y ago
  If the income is taxable for me, but I get no form in the mail and can't even request one (because it's not my account), then how was I supposed to file a correct tax return in the first place?
  - iends 2y ago
    Isn't that an issue with who provides the UTMA account?
    - kbolino 2y ago
      Maybe? I would think this would be a legal requirement and not something they have discretion over. Zooming out though, I think Direct File or something like it is actually the right way to go. This would never have happened if the IRS just told me what it expected of me instead of playing this weird entrapment game where I was expected to tell them what they already know.
larkost 2y ago
That sounds like you are agreeing with the post you are replying to: the IRS is trying very hard to stick to their rules. You have a deduction that neither you nor the IRS have paperwork for (since the fund is not acknowledging it as a covered expense), so they are following the rules. I can understand how you are frustrated about the situation, but this does not seem to me to be random behavior, but rather straightforward rule following.
- kbolino 2y ago
  If following the rules looks like there are no rules, what is the purpose of the rules?
  - selimthegrim 2y ago
    No Country For Old Men: IRS edition

gamblor956 2y ago

UTMA withdrawals by the child are not taxable, however UTMA income is taxable to the child... What exactly are you railing against? It sounds like the IRS is following the rules here.

kbolino 2y ago
If the income is taxable for me, but I get no form in the mail and can't even request one (because it's not my account), then how was I supposed to file a correct tax return in the first place?
- iends 2y ago
  Isn't that an issue with who provides the UTMA account?
  - kbolino 2y ago
    Maybe? I would think this would be a legal requirement and not something they have discretion over. Zooming out though, I think Direct File or something like it is actually the right way to go. This would never have happened if the IRS just told me what it expected of me instead of playing this weird entrapment game where I was expected to tell them what they already know.

larkost 2y ago

That sounds like you are agreeing with the post you are replying to: the IRS is trying very hard to stick to their rules. You have a deduction that neither you nor the IRS have paperwork for (since the fund is not acknowledging it as a covered expense), so they are following the rules. I can understand how you are frustrated about the situation, but this does not seem to me to be random behavior, but rather straightforward rule following.

kbolino 2y ago
If following the rules looks like there are no rules, what is the purpose of the rules?
- selimthegrim 2y ago
  No Country For Old Men: IRS edition