Ask MetaFilter posts tagged with irs

Tax me on the River

Christ, what an asshole — Tue, 05 Aug 2008 14:14:06 -0800

Gambling and the IRS: I've been honing my poker skills and I think I'm ready to take my game to the next level: professionally. If I begin making gains at both casinos and online, what is my duty in terms of declarations and bookkeeping while filing my taxes?

Can I opt out of income taxes on inherited retirement benefits?

xanthippe — Tue, 22 Jul 2008 23:01:02 -0800

Can I opt out of paying income taxes on inherited retirement benefits in the USA? I won't be filing a tax return, anyway. I am a beneficiary of my deceased mother's state retirement plan. I have been given the option to either roll the amount over into an IRA (which I don't want) or take a direct payment, which appears to be subject to a 30% tax: 20% is automatic, and the other 10% appears to be related to electing not to put the money into an IRA.

If I choose a direct payment, the forms give me the following options:

A) "10% federal income tax withholding from any taxable portion of the accumulated account"; or

B) "no federal income tax withholding from any taxable portion of the accumulated acount"; option B continues, "If you request no withholding, you may still be responsible for payment of federal income tax on the taxable portion of your distribution. You may also be subject to tax penalties if your total estimated tax payments and withholding are not adequate to cover your tax liability."

Firstly, could someone please clarify the meaning of option B? I assume it means opting out of an automatic tax payment and agreeing to voluntarily pay it on my next federal income tax. However, I have been living outside of the USA and not filing tax returns for several years, and I intend to continue doing so. I am specifically confused about the ramifications of the last sentence considering, as far as the IRS is concerned, I will not have any income this year.

My real question is therefore: What, if any, consequences will I face if I simply take the maximum amount in cash and do not later declare it as income? If there is a penalty for this, is it subject to a statue of limitations? In other words, is this an easy way out or a really bad idea? I intend to remain invisible to the IRS for the forseeable future; will this ruin my plan?

Lastly, given that I am unlikely to ever live or retire in the USA, is there any other reason, specifically relating to taxes or avoiding such, that I should choose the IRA rollover option instead of a direct payment?

Thanks for any advise. I know I should see a financial advisor/accountant but I currently have major logistical obstacles in this regard.

immigration - H4 visa question

tvjoshi — Wed, 16 Jul 2008 15:57:32 -0800

If you hold H4 visa applied by both previous company and new company (not approved yet). Can you go back to India and get your visa stamped on H4 applied by previous company? more info follows... My indian friend was on L1 visa for 2-3 years. While in US, he applied for H1 visa and changed his job to that company (company 'A'). Company A also applied for his wife's H4 visa in jan 2008. Now he wants to switch to company B, they are obviously applying for (transfering) his H1 again. His wife's H4 visa applied by company A (lets call it H4-A) is still in the pipeline and not approved. Company B is not applying for his wife's H4 because they said it's not required if you have it (H4-A) already.

My friend is worried that if he switches now and a query (regarding H4-A) comes from IRS to company A, they may not take appropriate action or may not intimate my friend or worse, they may tell IRS that my friend is not working there anymore and H4-A may get rejected.

There are 2 solutions -
1. delay switching company. let H4-A get approved. Once you have the approved H4-A copy, switch company.
2. ask company B to apply for H4 again (lets call this H4-B).

problem with solution 1 is he does not want to delay switching company because that means applying for GC by company B also gets delayed. Time is already running out of hand. if he applies for GC now and get labor in time, he may have a shot at applying for I-140 and I-485 soon.

Problem with solution 2 is - his wife wants to go back to India in dec 2008. If they apply for H4-B, they are not sure if H4-B will be approved before dec 08. She may not have the approved H4-B to take to India for visa stamping. ( Note that if he or his wife wants to visit India now, they will have to get their visas stamped from US embassy in India. )

Is it ok if she does not have the approved H4-B (she will have her receipt of application - LIN no) for visa stamping in India?

Assuming that while they have applied for H4-B. H1-A gets approved before dec 2008. Can she take H1-A to india to get the stamping done (even though H4-B is applied)?

What would be the best solution? Please help!

Any word if the IRS will rate the 2008 mileage rate because of the rapid increase in gas prices?

GuyZero — Mon, 09 Jun 2008 17:59:38 -0800

Any word if the IRS will rate the 2008 mileage rate because of the rapid increase in gas prices? The IRS set the 2008 mileage rate for business car travel way back in November of last year at 50.5 cents per mile. That's still more than the price of gas, but not as much as it was back then. Has anyone heard if the IRS will raise this value? (Note: I'm not going to claim it per se, but my company ties their mileage reimbursement rate to the IRS rate)

What happens to the money from uncashed economic stimulus checks?

BuddhaInABucket — Thu, 29 May 2008 00:11:53 -0800

For whatever reason, some people are going to fail to cash their economic stimulus checks. What happens to the money that was supposed to be given to those people, but which never leaves the IRS' account?

Can my minor children receive a gift from their great aunt that is excluded from the gift tax?

Duluth?! I Hardly Know Her! — Sun, 04 May 2008 16:08:02 -0800

Can my great aunt make a $12,000 gift to me, my wife, and each of our two kids (for $48,000 total) without incurring the gift tax? My (very generous) great aunt would like to give gifts to various extended family members but wants to be careful with the gift tax. From my research online, it seems beyond a doubt that she can give up to $12,000 per donee per year without triggering any gift tax or any obligation to report the gifts to the IRS.

The one question that I cannot find a straight answer on is whether she can give $12,000 to each of my 2 minor children and have that count separately from her gifts to me and to my wife. It seems to me that the answer is yes - I cannot find anywhere that the answer is no - but confirmation of this specific fact situation has eluded me.

If it matters, my family will use the combined money, including the kids' portion, immediately; it will not go into trust or into an account for when the kids turn older. Instead, we will use the money to fund improvements on our house that we have been deferring because we couldn't afford it. So when the money came in, I would sign my check for myself and sign the kids' checks on their behalf, deposit the money into our family's checking account, and then hand it over to a contractor.

Thanks for whatever help you can offer. I acknowledge that I should consult an independent professional and that if you are a lawyer or accountant you are not mine and you are not offering advice.

My NY state tax return was rejected because of the company who filed it. Now what?

unknowncommand — Sun, 27 Apr 2008 18:38:17 -0800

I think that the online tax service I used has messed up the New York State taxes for *anyone* who filed from New York City or Yonkers. Now what do I do? (sorry, long) I paid my federal taxes with free file, using one of the tax services linked from the IRS' page. Of course, I was too lazy to mail in my New York State return (IT-201), so I paid the company $12 to file it. A few days after submitting the return, their site said that it was rejected. There was no error code indicating what I should fix, and everything looked fine, so I just resubmitted. A week later, I checked back and saw that it was rejected again, with an error code of 0130. According to the NY State website, this means that the local taxes on my W-2 form did not match those on my IT-201.

So, I went over their online IT-201, and sure enough, there was no place to enter any information about local taxes (NYC and Yonkers are the only parts of the state that pay local taxes). I emailed the company to point out that their service would cause all state tax returns filed from NYC and Yonkers to be rejected, and their response was, "We were not able to support certain parts of some forms this season." So, of course, they offered me my $12 back. At which point, my head exploded.

Okay, seriously, am I insane? Is this not a big deal? Shouldn't it be on the news or something? It seems to me that this will fuck over at least a few other people.

1. I called the NY State tax office, and the woman actually got really panicky, but told me to call the IRS and the Better Business Bureau.
2. I called the IRS, but they didn't care because it is a state thing. I pointed out that they were verifying the accuracy of the company's services by listing it on their site, and they directed me to complain to the company who approves the free file businesses. That company wants a really complicated complaint, which I will do, except that it seems kind of small potatoes.
3. I have not yet called the BBB, because surely SURELY this is a huge deal and some government agency should deal with it.

Should I call the state tax people again? Or the BBB? Or what?

How do I find a companies Fed Tax ID online?

lattiboy — Tue, 15 Apr 2008 17:57:39 -0800

How to find a company's Federal Tax ID # (in a hurry!) I went to click "finish" on the ol' turbotax and realized I hadn't entered the info for a 1099-MISC from a company (ABC Networks, Disney). I (still can't believe I) somehow lost the tax receipt since filling out all the other info and now I'm screwed. Please help (if possible/legal). Also, if this isn't possible, is it advisable to file without the number?

PS I know how stupid this is.

Home office tax deduction worth rumored "red flag?"

answergrape — Tue, 15 Apr 2008 08:16:30 -0800

I'm still debating taking the home office deduction on this year's taxes. I understand that you are not my accountant.

I am a part-time instructor. I use my home office for grading, answering email from students, and one of the classes I teach is entirely online. I receive a W-2 for the income from all my classes.

I think I'm entitled to the home office deduction but scares me because of the whole "potential red flag" thing (I have an unnatural fear of the IRS despite the fact that I am totally honest on my taxes). Despite this, is it worth it to claim my office? How likely is it to trigger an audit? Is my W-2 information enough to document my use of the home office?

Excessively taxing a bonus?

leo. — Mon, 14 Apr 2008 17:43:51 -0800

So a friend's just received a bonus from her employer, but the bonuses seem excessive. (The taxes from that bonus exceed the total of taxes that were paid for the entire year.) Is there anything that can be done? Yes, life is dangerously close to the poverty line (yay acting!), but we knew this nice little bonus was coming in. However, we didn't expect that our 2000 bonus to be mostly gobbled up by about ~$500USD in taxes and another $125 to Social Security.

Isn't there a way we can have the employer re-issue the check as a one time gift or donation or something? I mean, it's a bonus and the taxes from that bonus exceeded the taxes that we paid for the entire year. (We got the bonus for staying with her job to train her replacements - so yes, on top of all that, unemployment.)

Logically, it would have made more sense to break up the bonus as 4 "regular" paychecks, right? Then the taxes taken out would have been less, and the employee would receive more money, and really feel appreciated, right?

Gah. Apologies for the venting and incoherent rambling. I am extremely frustrated at this situation.

I should've sorted this out ages ago but ... care to answer a last minute US tax/education credit question?

zeph — Mon, 14 Apr 2008 15:44:41 -0800

Egads! Last-Minute-(US)Tax-Question-Filter: Can a person generally claim the "Qualified Payments" as listed on their 1098-T form (sent from the university in addition to a W-2) towards an education credit? Or only the amount that they themselves paid, rather than the amount that was paid on their behalf by the university as part of their whole assistantship package? I know you're not my accountant and of course this isn't "official" tax advice, but suddenly I'm getting cold feet in terms of what I believe I can or cannot claim on my US Federal Income Tax for the year. I've read the IRS's Publication 970 (Tax Benefits for Education) but it still isn't clear to me and so I was hoping maybe someone else has figured it out for themselves and would be willing to share, or at least to reassure me that I won't wake up tomorrow surrounded by IRS commandos. So here goes:

My university sent me a 1098-T form, where Box 1 lists "Qualified Payments" as X dollars, and Box 5 lists my Scholarships/Grants as Y dollars. Those scholarships were a little bit less than my total "Qualified Payments" (or tuition), so every bit of them went to paying my tuition. Should I, therefore, claim the "Qualified Payments" amount as an educational tax credit? Or only the part I paid out of pocket (X - Y = Small Out of Pocket Amount)?

Looking at the eligibility requirements for the Lifetime Learning tax credit, it indicates (unless I'm grossly misunderstanding it) that any money that is paid towards my education, whether by me or someone else, can be claimed by me as a tax credit so long as that "someone else" doesn't claim it on -their- taxes. I'm assuming that this applies even if that someone else is the university itself so I think I'm okay in claiming this - but again, I don't want to misstep simply because I misunderstood the terms of the credit. Looking at my 1098-T, though, it does say "Summary of Educational Tax Credit Transactions" directly above the by-semester listing of my spring and fall tuition, so I'm assuming/hoping I'm on the right track here.

The difference in my refund between taking this credit with the full 'Qualified Payment' amount or not is somewhat large (at least for a very broke student like me!), so of course I would really like to take it if I could - so long as it's 100% legal, which is why I just want to double-check that my understanding of the matter is right. Again, I know this isn't official advice, but if someone could either raise the red flag for me if I -am- doing things wrong, or give me a tentative thumbs-up if I'm right in thinking I can claim my Qualified Payments as a tax credit, I would be most grateful either way!

(next year I'm going to go to a professional, AND I'm going to do it long before my taxes are actually due ... honest and for truly!)

Foreign Money Tax Filter

paperlanterns — Sun, 13 Apr 2008 17:06:25 -0800

Foreign Money Tax Filter: This is likely a silly question, but please humor me. Money sat in an interest-friendly account overseas for 20 years, was finally all withdrawn this year.... An older relative deposted a sum of money in an British bank many, many years ago. The money sat there and grew. 20 years later -- this year -- the relative had the money (principal + interest, and closed the account) sent over to the US and it was converted into dollars ($xx,xxx).

How do they claim this on their taxes? The sum total of it as interest income and just state that it's from a foreign bank? The money was earning interest overseas through out the years, but relative never claimed it on prior tax forms-- will this be a big problem for the IRS? Relative wants to just claim everything ($xx,xxx) on this year's tax form and pay all the tax on this interest income now.

Does this make sense? Apologies if there is an obvious answer. And I know you are not my tax accountant/lawyer!

TaxesFilter: Moving abroad, not raising flags

sirion — Sun, 13 Apr 2008 06:04:29 -0800

TaxFilter: Student abroad (moved in August), and don't want to get red flagged/audited due to sudden drop in income! How do I tell the IRS I moved? I moved to Austria in Aug 2007. I was making pretty good money teaching music (self-employed) in the US, and stopped working altogether after I moved. What's the best way to make all of this clear in my tax return and do whatever I can to not raise flags? (An audit when I'm in another country would be a royal pain in the ass)

I figure being self employed is almost enough of a flag on its own without having a sudden unexplained drop in income.

Early to file, late to pay

Anonymous — Fri, 11 Apr 2008 17:02:15 -0800

So I've already filed my tax returns for 2007. But I won't have the money to pay my April 15th taxes until next month. How badly will this hurt me? Due to my line of work I pay quarterly estimates, and know that on April 15th I owe a thousand dollars to the state for this quarter, and another thousand dollars to the state that I accidentally didn't pay from a 2007 quarterly estimate. (I'm all paid up for the Federal taxes until the middle of the year.)

My accountant said something about how I wasn't being penalized for that overdue grand due to the fact that last year was my first year paying taxes in my new state. However it's now my second year, and I won't have the money to pay my 2 grand in total state taxes until May. How will I be penalized?

Specifically, how much will the state charge me for being a month late in paying my estimate and penalty, and will this affect my credit or have any other negative repercussions for the year ahead?

Thank you!!

Roth IRA income limit

Kimpossible — Wed, 12 Mar 2008 22:02:26 -0800

How does the IRS find out if you exceed the income limit and contribute to a Roth IRA?

How to form an alliance with the IRS?

Anonymous — Fri, 07 Mar 2008 03:37:00 -0800

How do I bust my employer for TAX FRAUD? Yes, my employer is TOTALLY defrauding the government. He runs a retail business (about $15M Gross/year) in California. I have ALL sorts of documentation about not reporting large sums of cash (3-4M during christmas season), all sorts of documentation about where that money is physically kept, and a written discussion about how they get around good accounting.

Yeah, I couldn't believe it either about how open they were about all fraudulent activity. The employers also are HORRIBLE to all the employees...they scare them into subservience. So i want to bust them!

How do I do this? If you're going to refer me to this, yeah, I've been there and done that. I filled out the form, included ALL sorts of relevant info (tax forms, contradicting bank statements, emails, etc, etc.). I did that over a YEAR ago, and still haven't heard back. I also decided to do it with my real name/address/contact info. It wasn't even anonymous, because I knew how ludicrous it would sound to have ALL this concrete info about HUGE fraud. It really is crazy.

I understand that the IRS doesn't really have the time or manpower to investigate "my neighbor claims to use gel ink pens for work. But I see him using it for personal tasks". But this is HUGE. They have been defrauding the IRS for AT LEAST $1M EVERY year for 5+ years.

Anybody have any real advice. If you would prefer not to post on here, please feel free to message me.

Stay awesome, MeFites.

FICA exeption for J1 visa holder?

klanawa — Thu, 28 Feb 2008 10:11:39 -0800

J-1 visa holder. What taxes do I pay? I'm a Canadian citizen I was in the US from April, 2006 to August 2007 working under a J-1 visa. This was in a non-academic setting. I was labelled a "management trainee," and all wages were paid by my US employer.

I paid Social Security and Medicare taxes in both years, but it occurs to me that maybe they were withheld in error. All the materials I've seen on the IRS site say I "may be" exempt from those taxes without going into particulars. Conveniently, the IRS phones just ring and ring and ring.

Anybody have any experience with this or links to info that I've failed to locate?

Thanks.

IRS installments vs credit card debt

Anonymous — Tue, 26 Feb 2008 12:30:38 -0800

Paying US back-taxes: should I go for an installment plan or pay it all now, and pay off the credit card companies instead? I owe I think around $8,000 in backtaxes, and I'm going to owe more by April. I know I can set up an installment plan with the IRS, but I can't tell what the rules are governing the interest rate, or how they compare with credit card interest rates. My hunch is that the IRS is better on interest rates, but harsher on upfront fees to sort this out. I can probably plot all this out on a spreadsheet, but I just can't find all the info I need. Heyulp!

Is the IRS mad at me?

stupidsexyFlanders — Tue, 19 Feb 2008 08:00:49 -0800

Good news! Going through some old paperwork I just found a check for $2,600 that I'd never cashed from 2003. Bad news! It was a rollover distribution from a 401K at Fidelity, made out to E-trade. Fidelity says they did file a 1099 in the year they cut the check. Am I screwed for the back taxes, plus penalties? Apparently I had a notion to close out this account and consolidate the funds in a rollover IRA I have at E-trade. Never happened.

In the five years since, I've not heard anything from the IRS about this, despite the outstanding 1099 never being matched up by E-Trade with whatever form they file to show they got the $$ within 60 days.

I can't just unwind the whole thing and "decline" the check, as this was an employee 401(k) at Fidelity and they won't allow me to "add" to it. I explained it was never technically "withdrawn" but to them it was (the account still exists, with a zero balance). All they'll do is cut another check to the institution I name.

If I go that route I feel sure the IRS will match the distribution up with the deposit at E-trade and inflict all kinds of heinous penalties on me. What are my options?

I know you're not a tax advisor, but I don't think the $$ at stake here warrant paying an actual tax advisor. Maybe I'm wrong about that?

What Proof for Colorado Hybrid Tax Credit?

cschneid — Sun, 17 Feb 2008 21:46:44 -0800

What proof do I need to claim the Colorado Alternative Fuel Vehicle Credit on my taxes? I've done my taxes, and have a Prius I'm claiming, but it is totally unclear as to what if any proof they want with my return.

The FYI describing it has two sections. The first is for individuals, and the second is for Government and Charitable organizations. The Gov and Charities section has some forms listed, but they don't seem to match up with individual returns.

Then while searching, I ran across this (about.com, a great source!) that mentions how you must file a paper return in order to attach an invoice to the return. But of course, I don't trust my taxes to about.com.

Does anybody have the publication/law that describes what sort of proof Colorado is looking for?

I tell him all the time, "Haste makes waste"...

missuswayne — Sat, 02 Feb 2008 07:06:37 -0800

In his haste to mail our tax return as early as is humanly possible, Misterwayne forgot to get my signature on it before sending it in. How screwed are we? He realized it as he drove out of the post office parking lot. :) He's tried to get through to the IRS on the phone and could not (shocking!). He's going to try the local office on Monday, but has this happened to you? Will they shred our return? Do we have to re-file? Will we now get our refund sometime in, say, November?

File taxes with a name mis-match?

Anonymous — Thu, 31 Jan 2008 17:38:52 -0800

There's a name mis-match between my social security card and my W-2. Can I still file my taxes and get a refund? I am a single, unmarried dude. Let's say I changed my name from John Public Doe to John Public. This is not due to marriage or anything (just didn't like my old last name; I changed it to my middle name). I have not gone down to the social security office to change it (my legal paperwork is elsewhere and I can't get to it anytime soon).
But at work, the payroll person changed it to John Public as soon as I told her about it in conversation. Now my W-2 says John Public but my name with SS/IRS is John Public Doe. Can I still file my taxes (online, Turbotax if it matters) and get a refund? I am broke and would like a quick refund. But will this automatically get flagged and endlessly delayed?

I tried to google and came across this. It seems like a workable answer (file with old name and get it changed as soon as you can). Can I just go ahead and file (given same problem but different circumstances)?
Thanks!

Ever been in an investment partnership?

ijoshua — Sat, 26 Jan 2008 08:52:33 -0800

Tell me about your experience with investment partnerships. (Multiple questions inside.) I’m interested in pooling some funds with some friends and to try our hands in market investments. (This is in the US, Georgia)

I gather that we’ll need to establish a tax identity with the IRS. Where can I find more details about the tax implications?

How did you decide how to assign ownership of the partnership’s assets? What happens if a new person wants to buy in, or someone wants to cash out?

Which banks and brokerages work well for multiple account owners with low costs?

I hear some people pay taxes. Not me though. Oh, damn.

Anonymous — Thu, 17 Jan 2008 14:16:50 -0800

I haven't filed (US and NJ) taxes in... hm. Possibly ever. I'd like to fix that, but have no idea what I made and when, and how to start. Problem is, I'm not sure what I have and haven't filed. And I certainly don't have any W2s or such. And I have no sense of time, so I'm not sure where I worked and in what years. I shouldn't need to go back more than a decade .... Is there a way to get all that from the IRS? I'm pretty sure I WOULD have gotten money back all these years, so I shouldn't be in too much trouble for dodging, I'd hope. Oh, I suck.

(As a side note, this may be iffy in terms of needing anonymous, but my username is my real name, and I'd rather not have this amazingly stupid lack of follow-thru come up in a Google search by current or future employers or the like. I'm user 17389.)

Reconstructing cost basis on gifted bonds while I was an infant

Ryaske — Sat, 12 Jan 2008 13:44:24 -0800

I was given (gifts) federal savings bonds throughout my early childhood. When I was starting college, I cashed the bonds. Then, we had a devastating home fire disaster. I lost ALL of the paperwork for these bonds. The IRS came back regarding my taxes and wants to tax me on ALL of the redemtion. How can I construct the proper cost basis with NO information? Continue on for more details ... So, I was given (gifts) federal savings bonds throughout my early childhood. When I was starting college, I cashed the bonds. Then, we had a devastating home fire disaster. In it, I lost a lot of important things.. including the "shares redeemed" tax forms from the sale of my bonds, as well as any remaining paperwork we may have had regarding the gifting process.

So I filed my 2006 taxes, completely forgetting about these cashed bonds and my tax liabilities for them. Now, the IRS came back with the 1099-B from "Focus Fund Investor Class", "Boston Financial Data Services" located at 2 Heritage Dr, N Quincy, MA 02171.... which reports I received $5,442 in redeemed securities, which I believe to be 100% true.

The papers I received from teh IRS indicate that my cost basis is assumed zero, because I did not file a schedule D. They are asking for $871 in backed taxes.

I would like to correct this change, and provide the proper cost basis on these securities to reduce my taxes, BUT I HAVE NO PAPERWORK AT ALL regarding the purchase, transfer, nor redemption of the bonds. I don't know much if ANYTHING about the gifted bonds. Not where they came from, who gave them to me, etc. I just know my parents had them (in my name) while I was growing up.

I have about 3 weeks to mail my response before I am penalized further. How can I go about gaining information, paperwork, or anything else about these? Am I fresh out of luck? Should I just pay these taxes at a loss, and be done with it?

Thank you very much for any insight you can provide me. This is a huge punch to my stomach after what we've been through.

Thanks,
Ryan