The IRS Audit Blog

Archive for October, 2008

Question: Is there such thing as transfering an IRS debt to the other spouse?

Im asking this question for someone else….
The situation is… the married couple is in the process of a divorce, they file jointly they owe a large sum of money to the IRS now.
Soon to be x-wife is to blame for debt (although she went to HR and Block, they still let her deduct things that are not permissable), the husband recieved a letter saying that x-wife has not been making payments and they have ten days to make arrangements. The husband went to the IRS office and said he doesnt qualify for Spousal Relief. Few days back the x-wife said that she filled out a form that will let her transfer the debt solely to her…
I have never heard such a thing and I would assume the closest to what she is talking about is the “Spousal Relief” form, but neither of us qualify…
So what the hell is the x-wife talking about??

Answer: The IRS won’t let him off the hook no matter what the wife admits to. Since he signed the joint return, he’s equally liable unless he qualifies for innocent spouse relief, and you said that he doesn’t. So as far as the IRS is concerned, he’s responsible for paying the debt if she doesn’t.

She might have signed some legal paper taking responsibility – if so, he might be able to sue her for anything he has to pay to the IRS for the debt. That would become strictly a civil matter, and the IRS wouldn’t have anything to do with it. That really doesn’t sound real likely though. He should ask her for a copy of the paper she signed though, if he wants to either call her bluff or have evidence for a lawsuit.

Sometimes life isn’t fair. Sorry.

Franchise Tax Board: State Income Tax Filing Season Opens

SACRAMENTO, Calif.—-The Franchise Tax Board today updated state taxpayers on several law changes for the upcoming filing season, and outlined a variety of services provided by the tax department.

Question: I got an email from the IRS????? Pllzzz help!!?

Okay, I got this emil from THE REAL IRS and I don’t know why… I’m only 13 and it says I’m eligible to receive a tax refund because of my fisical activity???? Whatever that means….

Anyways, I’m pretty sure it was the real deal because it was from irs.gov….
I guess what I’d really like to know is, why did I receive this when I do not own a house, have kids, and have a job????? Did anyone else get this email???
the email address was service@irs.gov
oops… i responded telling them not 2 send me a message again…is this bad???

Answer: No, you did not receive an email from the IRS. Please visit http://www.irs.gov/newsroom/article/0,,id=170894,00.html
Recipients of questionable e-mails claiming to come from the IRS should not open any attachments or click on any links contained in the e-mails. Instead, they should forward the e-mails to phishing@irs.gov (follow the instructions).

Getting your money back

MONTROSE — Low-income Montrose County residents may be eligible for thousands of dollars more than they expect in 2009 tax returns.

Employment: Internal Revenue Service, Employer Profiles

City wants to fine businesses that don’t submit info

BRISTOL — To figure out tax assessments on businesses, the city relies in part on the confidential income and expense information provided to it.

Question: What is consider to be a Business?

For tax purposes, what is a business according to IRS rules? My plan is to have a business dealing with lending money to other people and paying delinquent real estate property taxes. I am not interested in getting customers. I want to be able to take off expenses for tax purposes when I am ready to attend real estate tax sales in other states.
I will be bidding on loans through a company call Prosper.com. This company does all of the paperwork for every state. I do not contact customers, I just help fund their requests, and then collect after Prosper receives the payments. The real estate property taxes are another part of my business. I would pay the county the property taxes and then the county will place a lien on that person’s property. Again, I would not have any contact with the property owners.

Answer: If you want to compute profit after deducting related expenses from income, then it is business. That is you file schedule C with your 1040.

Make sure to keep proper record of income and expenses. Better have a separate bank account for this activity so that you don’t mix personal expenses and business expenses.

On schedule C you record your income and expenses and the net income from schedule C is put on line 12 of Form 1040. Your business income is also subject to self-employment taxes @ 15.3%.

There is another alternative. You lend money on interest. You show all this income as interest income on your 1040. You can’t deduct related expenses. Interest income is passive (or unearned) income and is not subject to 15.3% taxes. However, IRS may have objection in treating this income as unearned income if you are actively engaged in it.

People often overlook many tax credits, deductions

WASHINGTON—If you thought you had the tax laws figured out, guess again. Every year, Congress makes changes—some big, some little—making it just a little more difficult to complete your tax return.

PART 4B: Bernard Madoff options for victims — Estate tax, Income tax, SIPC

Question: What does filling out an IRS Form W-9 do?

I’ve recently joined an online gambling site and have net winnings of $600. The site says that once you’ve reached $600, you have to fill out the W-9 form from the IRS.

My questions are: what is this form, what does it do, and are there any drawbacks in filling out this form?

I can choose not to fill it out – the site will just tax 30% of my winnings, but I’d like to know what this form does. Thanks for your help.

Answer: The W-9 gives them your ss# so they can send you a 1099 for your winnings. The 30% they’d take out if you refuse to fill it out is probably more than you’d pay if you just fill out the form and claim the winnings properly on your tax return by quite a bit unless your taxable income is hundreds of thousands of dollars a year.

Top 10 Small Business Tax Sites, Software & Services

Do you need a little tax help? If you’re not the type to just dump it all on your CPA (well, even if you are), here are our favorite tools to make the next few weeks as painless as possible.

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