No, this isn’t a case by Edgar Allen Poe, author of The Purloined Letter, written several years before Conan Doyle invented Sherlock Holmes and, considered by many to be the the prototypical detective story. This is the story of why one should be proactive with tax preparation.
Yesterday, I wrote that we were assembling and sorting the paperwork for our taxes when I found a 1099-R for a unaccountably large (to us) sum of money. According to this paperwork, the AIG owned insurance firm which handles David’s IRA had disbursed the check last April. After deducting the obligatory 10 percent for federal taxes from the gross amount, AIG says they sent David a check for the “net” amount. The 1099-R indicates we’re to pay taxes on the entire sum..of course. The problem..we have NO record of the check at either our bank or credit union. Thus we find ourselves having to pay taxes on money we never received.
The gross amount equalled about a fourth of David’s savings. He had not requested the check, nor had he instructed the firm to disburse the funds. So why did AIG disburse it? More to the point, what happened to the alleged check?
On turning age 72, David and I each received notification that we should take a minimum percent of the money from our IRA accounts each year. (The Federal Government requires this disbursement or else we would leave the funds alone.) So why did the firm disperse a check for a larger amount?
AIG says they have a cancelled check. David says he never saw the check and wants a photocopy (front and back of the check) which AIG is sending to him. David asked the representative, now what do we do? The representative said, “Get the Police involved!”
I think David’s great fear is that he is going gaga. He is a bit forgetful, for sure, but if he cashed the check, either the bank (joint account) or credit union (David’s personal account) should have a record. We will know if he cashed the check when we see the photocopy of the “cashed check.”
As of November last year, I finally persuaded David to use Electronic Funds Transfer (EFT) for the joint account. My income is credited to my account electronically, and several payments such as insurance, mortgage and communications (phone, internet, TV) payments are debited through my personal account. I have used EFT for years. I hate paper checks.
I think the AIG check was purloined by an employee within the company (embezzled), or taken in the mailroom or Post Office by a stranger (theft). If David had cashed it, 1/ the cancelled check would show up in one of the accounts he uses, 2/ and his distinctive signature will be on the back of the check.
If the missing check has been taken, we will have to discuss this problem with the IRS. I certainly don’t want to add insult to injury and pay taxes for money stolen during an unauthorized transfer. AND, I wouldn’t want to have this problem arise on April 15 (tax day).