The IRS Audit Blog

Archive for March, 2006

Multiple Issues Still On The Table In House-Senate Health Bill Negotiations

Reports explored contentious policies in the House and Senate versions of the health-overhaul legislation that are part of the final negotiations. The New York Times: One important – and until recently, rarely discussed – reform issue that splits Senate and House negotiators is states’ roles in implementing the health care overhaul. “The House bill envisions a new federal agency to oversee a …

Health Care and Tax Reform

Question: Anyone know when you can file 2009 tax’s with form 5405 (first time homebuyer)?

I purchased a home in Sept 2009. Paid a company online to do my taxes for me…found out can’t e-file with this credit. Went on ahead and paid and printed my tax return and then they tell me that the form 5405 isn’t even available yet and I will have to come back after the IRS releases it so that I can print it off to be able to file my taxes this year! Great..and I really needed my return…my car is on its last leg and was gonna get a new/used car with the refund!

Answer: Since we bought our house after November 6, when the deadline was extended and new provisions were included, we have to use the revised Form 5405. The IRS first said it would be released December 26th, that day came and they changed the release to “soon.” Amid pressure from new home buyers they changed it to January 8th. That day came and went and now they say “soon” again. Now somebody on here says it will be released in February. WHAT A JOKE!!! And people want government running our health care?!? This is why many people have no faith in government. It is inefficient and incompetent.

We really needed ours too. In fact, it worked the way government intended, the $8,000 was just the push we needed to go ahead and get the house. Now, after we spent the money and counted on the $8,000 to get rid of our debt, they keep pushing it off.

The good news for you though, is that you bought yours before the new rules took effect. You can use the old form 5405 (February 2009 version) and amend your 2008 taxes. That will get you your credit faster than waiting for the new form to file your 2009. If the company you hired online didn’t tell you that you could amend your 2008 taxes with the old 5405, do not use them again! They did not help you. You should’ve already had your credit by now.

As far as what to do with your car until your money comes, I don’t know what to tell you. I have a creedit card from college I was going to pay off with the tax credit. It’s finance charges are ridiculous. I am thinking about getting a new card and doing a balance transfer to keep from paying the finance charges until my credit comes.

Good luck to you. It is so sad that whenever the IRS wants something from you, they expect it NOW, but when you want something from them, you just have to be patient. This country is NOT what it used to be.

Doing taxes may not be fun, but at least it can be free to e-file

Taxpayers who file returns early are usually motivated by a desire to get refunds as quickly as possible, and that desire will be particularly strong this year. In more prosperous times, a big tax refund meant a trip to Disney World; these days, it’s a mortgage payment.

Question: Potenially Behind on my Taxes – Any Suggestions?

I have had a relatively short working career, the part-time and temp jobs I did through college yielded little income.

Since then (The past 5 to 6 years) I have had somewhat steady employment as a contract designer and no real way to track my income ( I have changed addresses a few times – companies I worked for kept sporadic records etc.) until this past year where I landed a management level position – yet still as a contracted worker with no benefits or taxes taken out to my knowledge.

I now feel it’s time to move on to payroll and into the benefits package – but that won’t occur until late October of this year.

I’m currently making 45K (annually) and do not want to jeopardize what little money a make by potentially alerting the IRS to my situation before I get my expenses and receipts together.

I’m confident I can “get right” with my tax situation – what’s my best course of action?

Thanks again for your time and interest.

Answer: The best thing to do now is to

1. Balance your books and get organized. you should have all your stuff together
2. Figure out your bottom line: How much income did you make
3. hire a prive tax consultant to do your taxes. Give him all your reciepts)
4. He can get them ready to file for when the time comes. His fee will be about 300 per return, but it will be well worth it as he will find awesome ways to save you money.

Temping vs. Interning: Which is Better for College Students?

In order to get necessary work experience, most college kids seek temporary agency jobs or internships. We talked with career experts to find out the pros and cons of each choice and what to expect.   

Self Employment Tax Tips : Tax Tips for Temp Employees

Question: IRS form 8880 Credit for Retirement Savings Contributions?

Is line 2 of the 8880 the amount of box 12b Code D? All the contributions from my 401(k). Line 2 states Elective deferrals to a 401(k) or other qualified employer plan,… When I use turbo tax online it says I can not take this tax credit but H&R Block allows me to take this credit. All you tax experts out there let me know if Understand this credit. It is an incentive to save using a 401(k) correct?
I guess I have to spell it out clearer…. Am I reading the 8880 correctly. All my 401(k) contributions I put on line 2 of my form 8880? I know the income rules. I am just asking if this is correct for Example If I put $1000 in my 401(k) and I made just under $25,000 single. The tax credit would be $1000 x .1 = $100 Which in turn gives me back $100 more on my refund. Turbo Tax says I don’t qualify for this credit which I don’t understand why H&R Block allows me to take it. (Both online sites no people told me this)

Answer: “Internal Revenue Code (IRC) Section 25B provides a nonrefundable tax credit for an eligible individual who makes a regular traditional IRA or Roth IRA contribution or defers a portion of his/her salary to a qualified employer plan. An individual or married couple files IRS Form 8880 to take advantage of the credit, which is only available through 2006.

An individual bases the credit calculation on a percentage of his/her regular IRA contribution and/or salary deferral up to $2,000 each year. The credit ranges from 10 percent to 50 percent of the IRA contributions and/or salary deferrals depending on an individual’s adjusted gross income.

As a nonrefundable credit, it is only available to the extent of an individual’s income tax. In other words, if an individual determines that he is entitled to a $1,000 credit but only owes a tax of $500, the credit will zero out his tax, but the remaining $500 of credit is lost.

Furthermore, the credit is not available to any full-time student, any individual claimed as a dependent on another person’s federal income tax return, or to any individual with adjusted gross income over $25,000 ($37,500 for an individual filing as a head of household and $50,000 for a married couple filing a joint return).”

Time for a change? New rules apply to Roth IRAs

The economy has led many to take closer looks at how their retirement savings accounts are faring and, in light of new rules that took effect at the beginning of this year, some financial advisers urge consumers to consider converting traditional Individual Retirement Accounts into Roth IRAs.

Mortgage fraud gets Orlando man 22 years in prison

Convicted once before in New York of mortgage fraud, Garry Martin moved to Orlando to bilk homeowners and banks out of more than $5 million in recent years, according to the U.S. Attorney’s Office. On Friday, U.S. District Judge Anne C. Conway sent Martin, 36, to federal prison until 2032 and ordered the real estate broker to pay more than $1 million to his victims, U.S. Attorney’s spokesman …

Income Tax Deadline Arrives Today