Note: According to the IRS, if a distribution to an owner-employee is a prohibited transaction and the fiduciary is only responding to written instructions in making the distribution, the fiduciary is not participating in the prohibited transaction and is not liable for the
penalty tax.(36)
The key variables that determine the breakeven holding period are the pretax rates of return for the annuity and the mutual fund, the taxpayer's tax rate during the accumulation period, the taxpayer's tax rate at the time the annuity is cashed out, whether the annuity's earnings are subject to the 10%
penalty tax, (see the sidebar on pages 74-75 for a summary of income tax rules affecting annuities) and the annual charges imposed on an annuity in excess of those charged a mutual fund with similar risk and return characteristics.
Feucht, Murphy Smith, and Robert Strawser, "The Negative Effect of the Marriage
Penalty Tax on American Society," Academy of Accounting and Financial Studies Journal, December 2010, http://bit.ly/2ErZIxJ) and is thus detrimental to society's interests (Floyd W.
Subject to limits and conditions, the
penalty tax generally will not apply to IRA distributions taken to pay qualifying medical expenses, health insurance premiums while unemployed, higher education costs, and qualified first-time home-buyer expenses (up to $10,000 lifetime from all your IRAs).
Many people are saying that they'll simply refuse to buy the unaffordable ACA plan and pay the
penalty tax, which is only a couple hundred dollars.
Marriage
penalty tax. Federal recognition of a couple's same-sex marriage may result in paying more federal income tax, since the combination of two salaries can push a couple into a higher tax bracket.
I can understand a
penalty tax for someone who is single and remaining in a three or four-bed property, but why is there a need to tax a tenant for having just one spare bedroom?