21 Jan Are taxes owed when you invest in a Roth IRA?
Q. We paid income tax on our Required Minimum Distributions (RMD) from our IRAs. We then gifted our daughters the maximum the IRS allowed. If they use this money, which tax was already paid on, to invest in a Roth IRA, can taxes be avoided upon deposit? Can we avoid paying tax twice on the same money?
A. You don’t have much to worry about here.
The tax law generally avoids double taxation.
That would apply in your case, said Gail Rosen, a Martinsville-based certified public accountant.
She said in this example, the tax is only paid one time — when you took the distribution from your IRA.
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This story was originally published on Jan. 21, 2022.
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