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Cacafuego
Jul 22, 2007

Bisty Q. posted:

Also, you are nowhere near anywhere where AMT is a 'thing' for you, so don't worry about that. The amount you mentioned was probably the AMT Exemption level that you're now over, but you have to hit a very high amount of income before AMT takes effect.

Thank you to both of you for the info. That does explain it better and makes it easier for me to understand.

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Leperflesh
May 17, 2007

Update. (For the background, see my posts on page 115.)

I got a CP2005 from the IRS, stating that the information I provided resolved the tax issue in question and the inquiry is now closed, with an amount due of $0.00. Thanks for your help guys!

AbbiTheDog
May 21, 2007

Leperflesh posted:

Update. (For the background, see my posts on page 115.)

I got a CP2005 from the IRS, stating that the information I provided resolved the tax issue in question and the inquiry is now closed, with an amount due of $0.00. Thanks for your help guys!

Great. KEEP THE IRS NOTICE. You said you lived in CA, expect a letter from them asking for money in 2 months - 2 years. They will not change their notice without you sending in the new IRS notice with a copy of your original response.

shodanjr_gr
Nov 20, 2007
Non-resident alien taxation question.

I'm in the US on an F-1 Visa, employed at my university, and I've entered the 6th calendar year of my presence here (came during August of 2009). In the past 5 tax years I filed non-resident returns since I was exempt from the substantial presence test (also filing form 8843). I am no longer exempt from the test and I've counted more than 183 days of presence in the US this calendar year. Consequently I have to file a proper 1040 return. My question is this. Do I somehow have to declare to the IRS that I am now filing as a resident whereas I was filing non-resident returns in the past? I don't believe there exists a form to do that and all people that I know just go ahead and file a regular 1040 without other documentation. Is that the right way to do it? My understanding is that I also have to communicate to the HR people at my school that they need to start deducting social security / medicare taxes from my paychecks. Is that correct?

e: Does the above scenario place me in a "dual-status alien for taxation purposes" situation?
e2: Further reading from http://www.irs.gov/Individuals/International-Taxpayers/Alien-Residency-Examples leads me to say that I'm not a dual-status alien. Exempting calendar years 2009 through 2013, I start counting days for the Substantial Presence test on 1/1/2014 which brings me to passing the test on 7/1/2014, leading to my tax residency beginning on 1/1/2014 (first day of presence in the US in the year when tax residency is achieved). Since I'll have been a tax resident for the entire 2014, I'm not a dual status case.

shodanjr_gr fucked around with this message at 12:47 on Oct 21, 2014

PatMarshall
Apr 6, 2009

shodanjr_gr posted:

Non-resident alien taxation question.

I'm in the US on an F-1 Visa, employed at my university, and I've entered the 6th calendar year of my presence here (came during August of 2009). In the past 5 tax years I filed non-resident returns since I was exempt from the substantial presence test (also filing form 8843). I am no longer exempt from the test and I've counted more than 183 days of presence in the US this calendar year. Consequently I have to file a proper 1040 return. My question is this. Do I somehow have to declare to the IRS that I am now filing as a resident whereas I was filing non-resident returns in the past?

No, just file a regular 1040 this year.

quote:

I don't believe there exists a form to do that and all people that I know just go ahead and file a regular 1040 without other documentation. Is that the right way to do it? My understanding is that I also have to communicate to the HR people at my school that they need to start deducting social security / medicare taxes from my paychecks. Is that correct?

Generally, yes. You are a US tax resident and should be paying into SS and medicare, etc. That said, I have no loving idea how visas work, but I think there is an exemption for non-resident students, which would explain why you were not paying these taxes before.

quote:

e: Does the above scenario place me in a "dual-status alien for taxation purposes" situation?
e2: Further reading from http://www.irs.gov/Individuals/International-Taxpayers/Alien-Residency-Examples leads me to say that I'm not a dual-status alien. Exempting calendar years 2009 through 2013, I start counting days for the Substantial Presence test on 1/1/2014 which brings me to passing the test on 7/1/2014, leading to my tax residency beginning on 1/1/2014 (first day of presence in the US in the year when tax residency is achieved). Since I'll have been a tax resident for the entire 2014, I'm not a dual status case.

Correct. You are not a dual status alien.

The Slack Lagoon
Jun 17, 2008



I am a graduate student in New Hampshire, from Massachusetts. I have been living in NH since the end of October, 2013. I haven't change my residency to NH from MA, as I didn't think it mattered that much, but I will be starting a full time job on Monday. Would it be worth it to switch my residency to NH from MA so I can avoid MA income tax? I spent 3 months working in MA this summer (90 days), but other than that have lived in NH.

Devorum
Jul 30, 2005

I recently retired from the military, and with the amount of debt I have (and the difficulty finding a job in my field at the moment) I'm going to have to break open my TSP, which is basically a traditional IRA. I'm aware it's not ideal and I'll have to pay a 10% penalty in addition to income taxes on the money....but I'm going to need the money to bridge the gap.

My issue arises in that I'm trying to decide if I should try to hold off until the next tax year begins to avoid slipping into a higher bracket. I've never really paid attention to my taxes before, and I'm finding conflicting information on brackets and deductions and it's all very confusing for someone who has just used TaxSlayer/TurboTax for the last 15 years.

I'd be filing single, and without the money from the IRA my AGI would be ~$35,000. Tapping my IRA would bump me up to ~$75,000, if I understand correctly that it would increase my AGI by the pre-tax/penalty amount.

Unfortunately, I don't know how much, exactly, was withheld from my pay pre-retirement, as I lost access to all of my pay statements from my active duty career. This isn't something I was warned about, so I didn't think to make backups.

Should I wait to withdraw it until next year if I can? Will it make a big difference?

I'm mostly just trying to not lose even more of my money to taxes than I already am due to having to withdraw my IRA early if I can help it.

Devorum fucked around with this message at 04:23 on Oct 28, 2014

JohnnyPalace
Oct 23, 2001

I'm gonna eat shit out of his own lemonade stand!
From a tax planning perspective, you might want to withdraw around $9,000 this year and the rest next year. Your $35,000 income + $9,000 withdrawal should keep you from having anything taxed at the 25% marginal rate for this year.

Devorum
Jul 30, 2005

So, if my math is right with an income of 35,000, contributions o my IRA of 718, a standard deduction of 6,200, and an exemption of 3,950...I should be able to withdraw up to $11,000 and still remain in the 15% bracket? 46,000-10,868= 35,132.

That's if i have the numbers right for the deductions and exemptions.

AbbiTheDog
May 21, 2007

Devorum posted:

So, if my math is right with an income of 35,000, contributions o my IRA of 718, a standard deduction of 6,200, and an exemption of 3,950...I should be able to withdraw up to $11,000 and still remain in the 15% bracket? 46,000-10,868= 35,132.

That's if i have the numbers right for the deductions and exemptions.

Only draw what you need at the time. You don't want to pull out a huge chunk and then get a job.

baquerd
Jul 2, 2007

by FactsAreUseless

AbbiTheDog posted:

Only draw what you need at the time. You don't want to pull out a huge chunk and then get a job.

Yes, there shouldn't be a "per-withdrawal" charge, so just pull what you absolutely need. Ideally, of course, you'd cut your expenses and not touch your retirement savings. $35k AGI is a little rough, especially for certain areas of the country, but if you're on your own, you can make it work.

Devorum
Jul 30, 2005

baquerd posted:

Yes, there shouldn't be a "per-withdrawal" charge, so just pull what you absolutely need. Ideally, of course, you'd cut your expenses and not touch your retirement savings. $35k AGI is a little rough, especially for certain areas of the country, but if you're on your own, you can make it work.

I didn't even think of a partial withdrawal. Now I feel a bit silly.

The primary reason for a withdrawal is to pay off some debt which would lower my expenses to a manageable amount. So...yeah, I'll just withdraw what I need to accomplish that.

My retirement was a bit short notice (Air Force force shaping), so I didn't have the savings I would have liked or the job hunting time I really needed.

Thanks for the advice and pulling me out of "withdraw everything immediately" panic mode.

AbbiTheDog
May 21, 2007

Devorum posted:

I didn't even think of a partial withdrawal. Now I feel a bit silly.

The primary reason for a withdrawal is to pay off some debt which would lower my expenses to a manageable amount. So...yeah, I'll just withdraw what I need to accomplish that.

My retirement was a bit short notice (Air Force force shaping), so I didn't have the savings I would have liked or the job hunting time I really needed.

Thanks for the advice and pulling me out of "withdraw everything immediately" panic mode.

Look at it two ways:
1) What's the interest rate on the debt you're carrying
2) What's the tax rate going to be on the retirement withdrawal

If you can keep #1 manageable, maybe #2 isn't your best bet.

manic mike
Oct 8, 2003

no bond too surly
I have a rental property income question.

I own a house and I currently live in it. My girlfriend recently moved in. Since we both work we made a deal that she would pay me rent and cover the internet bill. I cover the rest of the bills and continue to pay my mortgage. We are not married.

I understand that our situation is just like if I had rented a room out. I will be required to report the rent she pays me as rental income. The only difference is we share the entire house and sleep in the same room. Since the house is technically a rental property I should be able to deduct a bunch of stuff. For instance I'm doing a few minor upgrades. But since the house is not 100% rental I can only deduct part of the expenses. This is where I get confused. How do I determine how much goes towards rental deductions and how much goes towards my primary residence? Is it even possible to deduct rental property expenses in this situation? What can I deduct anyway? Is there a better way we can do this? What should I expect when I file next year?

Missing Donut
Apr 24, 2003

Trying to lead a middle-aged life. Well, it's either that or drop dead.

If memory serves me correctly, you should expect to include the rent as income and you may not claim any of the expenses against rental income. Your situation is nothing like having rented a room out, because you are renting out areas of the house that are still available for your personal use (like your bedroom), and are therefore nondeductible. No areas of your home have changed to that of a landlord-renter relationship. Your mortgage interest and property taxes would still be deductible as before as itemized deductions.

You may instead wish to amend your cohabitation agreement to have your girlfriend pay things like food and utilities instead of "rent" unless local laws prevent cohabitation, etc.

Kiwi Ghost Chips
Feb 19, 2011

Start using the best desktop environment now!
Choose KDE!

Missing Donut posted:

If memory serves me correctly, you should expect to include the rent as income and you may not claim any of the expenses against rental income. Your situation is nothing like having rented a room out, because you are renting out areas of the house that are still available for your personal use (like your bedroom), and are therefore nondeductible. No areas of your home have changed to that of a landlord-renter relationship. Your mortgage interest and property taxes would still be deductible as before as itemized deductions.

You may instead wish to amend your cohabitation agreement to have your girlfriend pay things like food and utilities instead of "rent" unless local laws prevent cohabitation, etc.

Pub 527 says you can deduct the rental part of your housing expenses even if they're still living in the house, so presumably the income and deductions will cancel each other out.

manic mike
Oct 8, 2003

no bond too surly
Thanks for the responses. It looks like I can't count this house as a rental property. So do I still need to report the money she gives me as income? Could I just consider it compensation for the remaining bills? It would kind of suck to have to pay taxes on rental income when I cannot deduct any rental expenses.

BonerGhost
Mar 9, 2007

manic mike posted:

Thanks for the responses. It looks like I can't count this house as a rental property. So do I still need to report the money she gives me as income? Could I just consider it compensation for the remaining bills? It would kind of suck to have to pay taxes on rental income when I cannot deduct any rental expenses.

Forgive me if there's something I missed, but is there a particular reason she can't pay those bills directly from her accounts? Even if it's only partial payment on something you guys might split, how is that more complicated than trying to account for the money she gives you that you then use for bills?

Seems to me that if you want the tax man all up in your business, you might as well go down to the courthouse and make it official.

Horseshoe theory
Mar 7, 2005

Kiwi Ghost Chips posted:

Pub 527 says you can deduct the rental part of your housing expenses even if they're still living in the house, so presumably the income and deductions will cancel each other out.

Except that mixed personal/rental areas are considered personal and therefore non-deductible due to the personal use taint. If you only rent a room or a floor, you could apportion the expenses related to that area, but since it's entirely mixed use, none of it can be deducted.

30 TO 50 FERAL HOG
Mar 2, 2005



What are the exact requirements to deduct moving expenses? I'm going to move across the country to live with my girlfriend at the end of the year. Do I simply have to already have a job where I am moving and claim that is what the move is for? Does the move have to be completed by a certain date? I'm leaving the 31st of December and won't arrive until the 1st of January. Does the fact that the move completes at the start of the new year make me ineligible? If it does, can I claim the move on my return for next year?

Tovarish
Oct 5, 2007
I've got a fairly standard question, I think, but I can't find any good advice on the internet that isn't caveated with 50 'check with a local tax pro'

my mother and I opened joint checkings and savings accounts a few years ago so I could handle some part of her finances for her, basically travel and paying some non-standard bills. Basically anything that wasn't ordinary, she'd ask me to look into, and if it was cool, pay it, etc. Like I'd pay her quarterly taxes out of it, and book her travel and stuff. Earlier this year, she cashed out one of her retirement accounts (~$50k) and put it into the savings account. Apparently she paid taxes on it at the time of cash out or however that works (held some back for taxes I guess).

Later this year, she passed away. What's my tax liability on this? I haven't really touched the account since she passed away, but I need to notify the bank and remove her from the account, but before I do that I want to make sure I'm not going to have to pony up like 35% of it in a check or something.

pig slut lisa
Mar 5, 2012

irl is good


My fiancee wife and I received several thousand dollars in cash and checks as wedding gifts. Is this taxable income (I'm thinking so), and if so how do we go about reporting it?

e: wait my 2L year tax course is coming back to me and now I'm thinking that gifts aren't "earned income" because you don't do any work to receive them? :saddowns:

pig slut lisa fucked around with this message at 03:09 on Nov 13, 2014

Horseshoe theory
Mar 7, 2005

Tovarish posted:

I've got a fairly standard question, I think, but I can't find any good advice on the internet that isn't caveated with 50 'check with a local tax pro'

my mother and I opened joint checkings and savings accounts a few years ago so I could handle some part of her finances for her, basically travel and paying some non-standard bills. Basically anything that wasn't ordinary, she'd ask me to look into, and if it was cool, pay it, etc. Like I'd pay her quarterly taxes out of it, and book her travel and stuff. Earlier this year, she cashed out one of her retirement accounts (~$50k) and put it into the savings account. Apparently she paid taxes on it at the time of cash out or however that works (held some back for taxes I guess).

Later this year, she passed away. What's my tax liability on this? I haven't really touched the account since she passed away, but I need to notify the bank and remove her from the account, but before I do that I want to make sure I'm not going to have to pony up like 35% of it in a check or something.

The issue is that 100% of that joint account is deemed to be your mother's property for estate tax purposes unless you can document what portion is whose. Of course, your mother may not have have an estate tax liability so it might be moot anyway, depending on the size of the estate left. The distribution will not be (potentially) taxable otherwise as it's not Income in Respect of a Decedent (IRD).

pig slut lisa posted:

My fiancee wife and I received several thousand dollars in cash and checks as wedding gifts. Is this taxable income (I'm thinking so), and if so how do we go about reporting it?

Gifts are only (potentially) taxable to the donor, not the recepient, so there's no taxable income.

AbbiTheDog
May 21, 2007

ThirdPartyView posted:

The issue is that 100% of that joint account is deemed to be your mother's property for estate tax purposes unless you can document what portion is whose. Of course, your mother may not have have an estate tax liability so it might be moot anyway, depending on the size of the estate left. The distribution will not be (potentially) taxable otherwise as it's not Income in Respect of a Decedent (IRD).


Gifts are only (potentially) taxable to the donor, not the recepient, so there's no taxable income.

Sounds like the Mom will get a 1099-R for 2014 in the spring. She will need to have a final 1040 filed and include that and any other income on her personal taxes.

Side note: Getting a refund for a deceased person from the IRS is like pulling teeth. Good luck. DO NOT push out all of the money without making sure her final bills are paid, including any potential tax liability.

Moscow Mule
Dec 21, 2004

Nothing beats the taste sensation when maple syrup collides with ham.
I've found out my elderly parents (one definitely with dementia, one maybe developing dementia) haven't filed tax returns for a couple of years. With fees & penalties they owe something like $20,000-$25,000. They've gotten a big fat envelope in the mail from the IRS that says they have 30 days to request a hearing and if they do nothing they can put a lien on their house. They can't really pay such a large amount. They live on social security mostly but my mom does get some mineral royalties from.
I believe they got the letter less than a week ago.

I really don't know where to go from here. People have been giving advice ranging from:

-Talk to your congressman's office and they'll tell you who to talk to at the IRS
-NEVER talk to the IRS. They'll punch you in the face and take all your stuff
-Get a tax attorney
-DON'T get a tax attorney they're unnecessary for this situation & expensive
-Get a CPA
-Go to H&R Block

I really have no idea which way to go. My parents are having a tough time keeping track of their bills & financial info by themselves. I am pretty sure they're not going to take care of this at all if I don't arrange something for them.

Can I just get some guidance in which way to go? I feel like I don't have a lot of time to go on wild goose chases.

sleepy gary
Jan 11, 2006

Moscow Mule posted:

I've found out my elderly parents (one definitely with dementia, one maybe developing dementia) haven't filed tax returns for a couple of years. With fees & penalties they owe something like $20,000-$25,000. They've gotten a big fat envelope in the mail from the IRS that says they have 30 days to request a hearing and if they do nothing they can put a lien on their house. They can't really pay such a large amount. They live on social security mostly but my mom does get some mineral royalties from.
I believe they got the letter less than a week ago.

I really don't know where to go from here. People have been giving advice ranging from:

-Talk to your congressman's office and they'll tell you who to talk to at the IRS
-NEVER talk to the IRS. They'll punch you in the face and take all your stuff
-Get a tax attorney
-DON'T get a tax attorney they're unnecessary for this situation & expensive
-Get a CPA
-Go to H&R Block

I really have no idea which way to go. My parents are having a tough time keeping track of their bills & financial info by themselves. I am pretty sure they're not going to take care of this at all if I don't arrange something for them.

Can I just get some guidance in which way to go? I feel like I don't have a lot of time to go on wild goose chases.

I think step 0 is to get your parents to sign over power of attorney to you if you want to take care of this stuff for them. The rest I don't know enough about to add anything meaningful.

sullat
Jan 9, 2012
If you want to make tax decisions on behalf of your parents, you need to get a power of attorney for tax issues. There's a form, Form 2848 that you'd need to submit to the IRS. Now, if you're going to dispute the underlying tax liability with the IRS, than it couldn't hurt to talk to an attorney. I don't really know how you'd go about doing that.

You say that they didn't file any returns, so you'll want to see if the IRS filed a "substitute for return" for your parents and is basing the liability on that. You'll want to file the missing returns even if the IRS has done that, because the substituted returns don't include any expenses or deductions that the IRS is unaware of, and the actual liability may be lower. If you're not confident about doing that yourself, a tax preparer should be able to do that for them pretty easily.

But if you agree that they owe the money, what you're going to want to do is enter them into a monthly payment plan with the IRS. You can call up the IRS and do that (once you've successfully filed your POA form, that is) without too much trouble. As far as any liens go, if one has already been placed on their house, you can request to have it lifted once you're in a payment plan. Requesting a payment plan is pretty straightforward, and once you're in one, the IRS will generally stop bothering you (as long as you start filing and paying future year's taxes... you'll want to look into that).

You can also request an abatement of the penalties and interest once you're on the line with the IRS. Whether or not it can be granted... who knows? But they may be eligible for that.

Now, if your parents are unable to make payments, there are two options; the first is an "Offer in Compromise", to settle for a lower amount and enter into a payment plan on that. There should be a tool on the IRS website to see if that is something they might qualify for. Probably not, but you can look into it. If they don't qualify for that, but making payments would be a serious hardship, you can request to have them placed in "Currently non-Collectible" status, which means that the IRS will go ahead with the lien, but not take any further collection action until their financial situation improves.

Moscow Mule
Dec 21, 2004

Nothing beats the taste sensation when maple syrup collides with ham.
Thanks for the info, that's helpful. Should we go ahead and fill out this form for the request for a hearing or is that going to limit our future choices?

I'm looking into a CPA right now to see about filing the missing returns and I'll get my dad to call about the substitute for return.

Re: overall power of attorney. I wouldn't mind doing that but as long as my father thinks he is mentally fit enough to manage his & my mom's affairs, he's not going to accept it without a fight. He's very paranoid about getting put in a home or having his freedom taken away (by family, government, etc). I'm the only family member he talks to often and I don't want to spook him to the point he closes me out completely. I only found out about this business because I walked by a table covered in mail, saw something from the IRS and brought it to him to open.

If he feels overwhelmed he might be ok with the POA just for tax purposes so I'll ask him about it.

Total Confusion
Oct 9, 2004
What are the rules for determining foreign tax credits? I live in Europe and got a CPA focusing on expat returns to do my taxes last year and she put down the taxes I paid for social security, state-provided health insurance, unemployment, etc. (all mandatory and determined as a percentage of my salary) as counting towards my foreign tax credit.

As I'm planning on doing my own taxes this year, I wanted to confirm this was correct. In Pub 514, it says that a tax qualifies as a FTC if: 1. it is a tax; that is, you have to pay it and you get no specific economic benefit from paying it and 2. the predominant character of the tax is that of an income tax in the U.S. sense.

I'm assuming all of those things in addition to the "income" tax I pay qualify because I can't get out of paying them, I don't get a specific economic benefit from them and they are based on my income. Or am I being too hopeful/had a bad CPA?

AbbiTheDog
May 21, 2007

Moscow Mule posted:

Thanks for the info, that's helpful. Should we go ahead and fill out this form for the request for a hearing or is that going to limit our future choices?

I'm looking into a CPA right now to see about filing the missing returns and I'll get my dad to call about the substitute for return.

Re: overall power of attorney. I wouldn't mind doing that but as long as my father thinks he is mentally fit enough to manage his & my mom's affairs, he's not going to accept it without a fight. He's very paranoid about getting put in a home or having his freedom taken away (by family, government, etc). I'm the only family member he talks to often and I don't want to spook him to the point he closes me out completely. I only found out about this business because I walked by a table covered in mail, saw something from the IRS and brought it to him to open.

If he feels overwhelmed he might be ok with the POA just for tax purposes so I'll ask him about it.

The POA is just for tax purposes (says on the form at the top, Form 2848).

The worst thing you can do is ignore the IRS. Get the POA, call the agent, fax over the POA and tell them the story.

You can also get online transcripts (or request them from the agent). You want "account transcripts" and "wage and income transcripts" to sort things out. (https://www.irs.gov for online). Note the online registration requires you to answer questions about your parents credit history, and you should request one for both parents.

If you live in a state with an income tax they'll be on your parents as well so be prepared for that.

As far as the lien, the IRS won't release the lien until the debt is paid off. You can try the Offer in Compromise (the poo poo they sell on TV) but note that it takes 12-18 months for that to go through and the fees for that are typically around $5,000 or so, and the odds of success are slim.

If you're in the OR/WA area let me know, there's a fantastic ex-IRS agent around here that is the go-to guy for lovely tax stuff.

fordan
Mar 9, 2009

Clue: Zero

Moscow Mule posted:

I've found out my elderly parents (one definitely with dementia, one maybe developing dementia) haven't filed tax returns for a couple of years. With fees & penalties they owe something like $20,000-$25,000. They've gotten a big fat envelope in the mail from the IRS that says they have 30 days to request a hearing and if they do nothing they can put a lien on their house. They can't really pay such a large amount. They live on social security mostly but my mom does get some mineral royalties from.

There's also a decent possibility the amount won't be anywhere near that high. I know when I missed a page of 1099 transactions because I was dumb and double-sided the printout of the PDF from my mutual fund company the IRS assumed that I had purchased all my mutual funds for $0 and so the entire distribution on the 1099s were subject to capital gains. When I did the math with my cost basis the amount I actually owed was literally 10x less than was on the initial paperwork from the IRS.

PatMarshall
Apr 6, 2009

Gold and a Pager posted:

What are the rules for determining foreign tax credits? I live in Europe and got a CPA focusing on expat returns to do my taxes last year and she put down the taxes I paid for social security, state-provided health insurance, unemployment, etc. (all mandatory and determined as a percentage of my salary) as counting towards my foreign tax credit.

As I'm planning on doing my own taxes this year, I wanted to confirm this was correct. In Pub 514, it says that a tax qualifies as a FTC if: 1. it is a tax; that is, you have to pay it and you get no specific economic benefit from paying it and 2. the predominant character of the tax is that of an income tax in the U.S. sense.

I'm assuming all of those things in addition to the "income" tax I pay qualify because I can't get out of paying them, I don't get a specific economic benefit from them and they are based on my income. Or am I being too hopeful/had a bad CPA?

Kinda depends, taxes for social security, health insurance, etc. could be creditable or could be non-creditable, depending. Stealing from KPMG "The employee portion of foreign social security taxes is generally considered to be foreign income tax available for the credit. Social security taxes are not creditable, however, if paid to a country with which the United States has a social security totalization agreement." Here is the list of totalization agreements: http://www.irs.gov/Individuals/International-Taxpayers/Totalization-Agreements

The idea is if there is a totalization agreement, your taxes paid to the foreign country are credited to your US social security.

Total Confusion
Oct 9, 2004

PatMarshall posted:

Kinda depends, taxes for social security, health insurance, etc. could be creditable or could be non-creditable, depending. Stealing from KPMG "The employee portion of foreign social security taxes is generally considered to be foreign income tax available for the credit. Social security taxes are not creditable, however, if paid to a country with which the United States has a social security totalization agreement." Here is the list of totalization agreements: http://www.irs.gov/Individuals/International-Taxpayers/Totalization-Agreements

The idea is if there is a totalization agreement, your taxes paid to the foreign country are credited to your US social security.

Cool, thanks! I went back and had a look at last year's return and it seems that she counted everything other than the pension contributions for my FTCs.

Beast of Bourbon
Sep 25, 2013

Pillbug
A family member passed away in France, owned some plots of land/houses, due to the division laws there, the estate person is selling the lands and splitting it equally among the heirs. I am one of the smallest % heirs, so it's not really a colossal amount of money, but the estate guy asked for my bank info to wire the money to here in the US, so I'm going to be getting some wire transfers (10k to maybe 20k total). How in the world do I claim this on my taxes? Hopefully they will happen after January so I don't have to worry about it on this tax year, just want to start planning.

edit: I realize this reads like a scam, haha. But it's actually not!

Horseshoe theory
Mar 7, 2005

Beast of Bourbon posted:

A family member passed away in France, owned some plots of land/houses, due to the division laws there, the estate person is selling the lands and splitting it equally among the heirs. I am one of the smallest % heirs, so it's not really a colossal amount of money, but the estate guy asked for my bank info to wire the money to here in the US, so I'm going to be getting some wire transfers (10k to maybe 20k total). How in the world do I claim this on my taxes? Hopefully they will happen after January so I don't have to worry about it on this tax year, just want to start planning.

edit: I realize this reads like a scam, haha. But it's actually not!

You don't owe taxes on bequests. Assuming that the family member was foreign, there's no US tax consequences for their estate (and there's no filing requirement if the bequest is less than $100,000 from the estate), either (since the property was foreign).

Beast of Bourbon
Sep 25, 2013

Pillbug

ThirdPartyView posted:

You don't owe taxes on bequests. Assuming that the family member was foreign, there's no US tax consequences for their estate (and there's no filing requirement if the bequest is less than $100,000 from the estate), either (since the property was foreign).

Oh nice! Yeah it will be way under $100k, but thanks for making that easy.

Juanito
Jan 20, 2004

I wasn't paying attention
to what you just said.

Can you repeat yourself
in a more interesting way?
Hell Gem
Hi guys,

I got a CP2000 notice for 2012. And I need help in knowing how to respond.

They are saying that I owe thousands of dollars, and this is because of a sweepstakes win that I forgot to include when I filed taxes. I intended to do an amended filing but I forgot to actually file it.

The sweepstakes was a trip for 2 to a movie premiere in LA. The win only included the airfare and the hotel room for 2 nights. It was for 4 people max, but I only took my wife. ARV $4500. This was a 1099-MISC form.

So my income took a $4500 increase, which eliminates certain credits that I had received, including Additional Child Tax Credit and EIC. Ouch. If I were to get that reduced, even $1000, that would be enough to get me the credits back, and not have me owe the IRS thousands.

So, the organizers of the sweepstakes haven't answered my emails (no surprise). But I've got the original email that shows exactly how much they paid for our airfare, $1705.20, and I was able to get a copy of our hotel bill too, $635.59. That means they only spent $2340.79 on our prize, that's $2159.21 that's on my income that shouldn't be.

Now when I spoke to someone from the IRS over the phone, he pretty much said that I shouln't bother filing an amended Form 1040X, instead if I'm disputing things, I should just write a response, and include my evidence.

Is he right? Do you think that writing out an explanation (including a copy of my itinerary, which includes the airfare, and also a copy of the hotel receipt), would be enough to get this resolved? I expect that I'll owe a few hundred dollars in taxes, but not thousands.

Thanks!

They also want to verify education credits that we had claimed. We got 1098-T statements from our schools that year, but my wife's school didn't put a value in the first field (which is where it should show how much she actually paid). So I found our old credit card statements, and have the exact amounts. I was planning on just including all of these statements, and highlighting the payments to her school. Is this an okay response?

Epi Lepi
Oct 29, 2009

You can hear the voice
Telling you to Love
It's the voice of MK Ultra
And you're doing what it wants

Juanito posted:

Hi guys,

I got a CP2000 notice for 2012. And I need help in knowing how to respond.

They are saying that I owe thousands of dollars, and this is because of a sweepstakes win that I forgot to include when I filed taxes. I intended to do an amended filing but I forgot to actually file it.

The sweepstakes was a trip for 2 to a movie premiere in LA. The win only included the airfare and the hotel room for 2 nights. It was for 4 people max, but I only took my wife. ARV $4500. This was a 1099-MISC form.

So my income took a $4500 increase, which eliminates certain credits that I had received, including Additional Child Tax Credit and EIC. Ouch. If I were to get that reduced, even $1000, that would be enough to get me the credits back, and not have me owe the IRS thousands.

So, the organizers of the sweepstakes haven't answered my emails (no surprise). But I've got the original email that shows exactly how much they paid for our airfare, $1705.20, and I was able to get a copy of our hotel bill too, $635.59. That means they only spent $2340.79 on our prize, that's $2159.21 that's on my income that shouldn't be.

Now when I spoke to someone from the IRS over the phone, he pretty much said that I shouln't bother filing an amended Form 1040X, instead if I'm disputing things, I should just write a response, and include my evidence.

Is he right? Do you think that writing out an explanation (including a copy of my itinerary, which includes the airfare, and also a copy of the hotel receipt), would be enough to get this resolved? I expect that I'll owe a few hundred dollars in taxes, but not thousands.

Thanks!

They also want to verify education credits that we had claimed. We got 1098-T statements from our schools that year, but my wife's school didn't put a value in the first field (which is where it should show how much she actually paid). So I found our old credit card statements, and have the exact amounts. I was planning on just including all of these statements, and highlighting the payments to her school. Is this an okay response?

He's right that you don't have to amend, writing a letter, including your backup and highlighting the relevant numbers is enough for both of the issues and is what my boss has me do for our clients all the time. The only thing I don't know is whether the IRS will accept your valuation of your trip without a corrected 1099. Be sure to mention that the sweepstakes holder has not responded to your efforts to contact them. Good luck!

AbbiTheDog
May 21, 2007

Juanito posted:

Hi guys,

I got a CP2000 notice for 2012. And I need help in knowing how to respond.

They are saying that I owe thousands of dollars, and this is because of a sweepstakes win that I forgot to include when I filed taxes. I intended to do an amended filing but I forgot to actually file it.

The sweepstakes was a trip for 2 to a movie premiere in LA. The win only included the airfare and the hotel room for 2 nights. It was for 4 people max, but I only took my wife. ARV $4500. This was a 1099-MISC form.

So my income took a $4500 increase, which eliminates certain credits that I had received, including Additional Child Tax Credit and EIC. Ouch. If I were to get that reduced, even $1000, that would be enough to get me the credits back, and not have me owe the IRS thousands.

So, the organizers of the sweepstakes haven't answered my emails (no surprise). But I've got the original email that shows exactly how much they paid for our airfare, $1705.20, and I was able to get a copy of our hotel bill too, $635.59. That means they only spent $2340.79 on our prize, that's $2159.21 that's on my income that shouldn't be.

Now when I spoke to someone from the IRS over the phone, he pretty much said that I shouln't bother filing an amended Form 1040X, instead if I'm disputing things, I should just write a response, and include my evidence.

Is he right? Do you think that writing out an explanation (including a copy of my itinerary, which includes the airfare, and also a copy of the hotel receipt), would be enough to get this resolved? I expect that I'll owe a few hundred dollars in taxes, but not thousands.

Thanks!

They also want to verify education credits that we had claimed. We got 1098-T statements from our schools that year, but my wife's school didn't put a value in the first field (which is where it should show how much she actually paid). So I found our old credit card statements, and have the exact amounts. I was planning on just including all of these statements, and highlighting the payments to her school. Is this an okay response?

http://promolaw.com/resources/tax_issues.htm

1099 issuer might have gotten lazy. I'd include what was actually paid in a written response to the CP2000. Don't send in an amended return, that messes the IRS up.

There's a part of the CP2000 where you write back that you disagree with some of the changes. Expect this to take 2-3 months.

Note if you live in a state with an income tax you will get a notice from the state as well for the ORIGINAL IRS notice. My state (OR) won't budge off the original notice they received until the IRS fixes things on their end, so good luck with that.

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Juanito
Jan 20, 2004

I wasn't paying attention
to what you just said.

Can you repeat yourself
in a more interesting way?
Hell Gem
Thanks, guys.

I just heard from United after my receipt request. On their site, you can only request a record if it's less than 2 years from today, and you pay $20 per passenger, so I should have had to pay $40, but I couldn't make the request since it was from May 2012.

So I filled out a form to customer care, and never really expected to hear back, but they just emailed me the flight information/receipts, so I have the best possible record showing the dollar amounts.


Even better though, I heard from the sweepstakes coordinator, and she apologized for not responding, and said that they were looking into this. I wrote back and included the details that I already have, in case I can help the process at all. I'm definitely feeling relieved to have everything come together.

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