The IRS Audit Blog

Archive for December, 2006

Question: Can my 2 year old child gift money to my parents according to IRS rules?

I would like to gift some money to my parents to help them pay for their new house. According to IRS rules, the maximum that any individual can gift to another individual is $12,000. Therefore, I, myself, can clearly gift $12,000 to my parents.

Can my 2 year old daughter legally gift another $12,000 to my parents?

Thanks!

Answer: Your 2-year old cannot give property that he does not own, and he is not competent to understand anyway.

However, you can give $12K to each parent each year and not have to file a gift tax return. You could give them $24K, and then loan them additional money, and then forgive that loan next year, at which time it becomes a gift.

Even if you give them more than $24K in one year and have to file a gift tax return, you almost certainly will not owe gift tax. The gift tax return keeps track of your lifetime gifts for purposes of computing estate taxes.

The tax deductions most often overlooked

Every year, the Internal Revenue Service dutifully reports the most common blunders that taxpayers make on their returns. And every year, at or near the top of the “oops” list is forgetting to enter their Social Security number at the top of the tax form — or making a mistake when entering those…

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IRS: Low-income workers may be missing out on credit

BLOOMINGTON — Central Illinois taxpayers with large familiesand those who saw their wages cut last year may benefit from anexpansion of the Earned Income Tax Credit, the Internal RevenueService said Friday.

IRS – An Examination of the 1040 & The Income Tax Law

Question: will i get a stimulus if i owe defaulted student loans if i’m in a payment plan already?

i’ve been in a payment plan with an student loan collection agency for a few months. i owe like $4,000. these loans are almost 10 yrs old and are no longer on my credit report. i checked the irs.gov website and it said i should be receiving a stimulus checked mailed out between june 27. so is it possible that some slip threw the cracks and get a stimulus check even if you owe? i’m paying the student loan debt back now. has anyone gotten a stimulus check with defaulted student loans. i’ve tried calling the number on the website but its always busy.

Answer: It depends on if this agency, or any other, has placed a government lien on your social security number. Until you have completed your 12-month repayment terms to bring your loans back into good standing (which I am assuming is what you are doing), the loans are technically still considered to be in default. I would put 80% chance that the check will go directly to the company handling your loans, then you will get a letter advising this is what happened. I went through this process a few years back, and I believe I had a tax refund that went to the company even though I was making monthly payments since they did not remove the lien info until the 12-months passed. Now, I make sure I never pay the government more than what I might owe!

West Virginia Continues Cuts

As West Virginia lawmakers begin crafting a slimmed-down budget for the upcoming year, Gov. Joe Manchin is pressing ahead with his plan to cut current spending.

IRS Collection Alternatives – An Overview, from the Taxpayer Advocate Service

Question: How do I use the $3,000 deduction for childcare? Would there be increased risk of an audit?

My mom has been coming to my house to help me babysit while my wife and I work. I’ve been giving her cash to reimburse her for food and gas. It probably came out to $3600 for the year.

I just found out that I could claim $3,000 for childcare expenses. Is this the same situation as a household employee? Was I supposed to keep careful records and deduct social security or unemployment taxes? If I claim the deduction, my mom will need to claim the income. Would that expose us to additional risks of an audit? Is it worth the extra hassle and paperwork?

Answer: You will have to report her name address and SS# to the IRS on form 2441. They will use this to check that she claims the income on her return. She will have to file a Schedule C and the income will be subject to self employment tax and income tax. She will be able to deduct any expenses she has on the Schedule C.

Iplayco Announces Financial Results for the Year Ended September 30, 2009

LANGLEY, BRITISH COLUMBIA– – Iplayco Corporation Limited today announced its financial results for the year ended September 30, 2009. All amounts are in Canadian dollars unless otherwise noted.

high risk areas are not being audited

Fitch Affirms Altria Group’s IDR at ‘BBB+’; Outlook Stable

CHICAGO—-Fitch Ratings has taken the following rating actions on the Issuer Default Ratings and outstanding debt ratings of Altria Group, Inc. , Philip Morris Capital Corp. , Altria Finance Ltd. , and UST LLC :