IRS requires ID verification on phone help line

There has been a lot of reporting about tax scams involving purported phone calls from the IRS. The IRS will not make unsolicited phone calls to you. Now the IRS is showing some concern about phone calls originated by you. This is a good thing — the IRS wants to be sure that they are speaking to you rather than some identity thief.

If you need to call the IRS about your personal tax return, you will need to have available your Social Security number and birth date, filing status, your prior-year tax return and the tax return for the year that you are calling about.

If you receive an IRS letter regarding possible identity theft (Form 4883C), you will need to have available the IRS letter, your current-year tax return, your prior-year tax return and supporting documents, such as your W-2 and 1099 forms.

Identity thieves seem to have a particular interest in tax filings. It can be annoying to have to verify your own identity with the documents discussed above, but these documents may well be the best way to prove that it is you making the call to the IRS.

Q: In 2016, I made a traditional-to-Roth IRA conversion. I was 47 at the time and was aware that I would have to pay income tax on the conversion. The amount was $40,000 and I plan to pay the tax when I file in April. What I did not think about was the possible 10 percent

penalty for early withdrawal from an IRA. Does this apply to a Roth conversion?

The early (before age 59½) withdrawal penalty does not apply to Roth conversions. However, going forward, you need to be careful about a few things that might trigger the penalty.

First, it is important to use funds other than the converted funds to pay the income tax. If I assume the federal tax on your conversion is $11,200 and you use some of the converted funds to pay the tax, you would have only $28,800 to place in the Roth.

The funds converted to the Roth avoid the penalty but, if some portion of the converted funds is used to pay the tax, then you will have to pay the 10 percent penalty on those funds.

Because the penalty may be avoided for converted funds, Congress wanted to prevent a conversion followed by a withdrawal of principal shortly after the conversion.

For example, if you convert in 2016 and then withdraw the funds in 2017, when you are 48, it would seem that you could avoid the 10 percent penalty. This would be a convenient way to take IRA funds before age 59½.

To prevent this, the converted funds must stay in the Roth until the first day of the fifth tax year following the conversion. This means that, in your case, you cannot withdraw the funds until January 1, 2021.

You will still be under age 59½ in 2021 so, if you wait until then, you could actually avoid the 10 percent early withdrawal penalty. But you would need to plan around the five-year rule.

Q: My wife and I are moving to Denver this summer. We plan to make a house-hunting trip in April.

We’re going to drive and will probably stay for a week. We’ll have meals and hotel charges in addition to our mileage. Can we deduct the cost of the house-hunting trip and, if we can, what records will we need? Is there a special form for this?

You can’t deduct any costs for a house-hunting trip. Congress eliminated this deduction over 20 years ago.

As a consolation prize, you will be able to deduct moving expenses. I assume that you are moving for a new job; if not, the moving expenses are also nondeductible.

You’ll use Form 3903 to report moving expenses. This is a very short form that is easy to complete, but you’ll need records and receipts for the costs of transporting your household goods.

Your mileage will be deductible, as well as any storage costs for a period of up to 30 days. If you require any lodging that can also be deductible.