The IRS Audit Blog

Archive for February, 2009

Question: Tax Refund Question?

I filed my 2007 taxes early 2008, filing single. Well my boyfriend and I have lived together for 3 years. He went to a accountant to file his after I already received my refund in the mail. When my boyfriend went to have his taxes professionally done, the accountant told him we could have filed jointly, married. We live in Alabama, and he said we could file under common law marriage. Well he said even though I already filed and received my refund, he could still fill out taxes for us jointly married and just send in a 1040X Amended Form with it. On the amended form he put that I should have filed married, joint, hoping the IRS will refile me. Would this work?? I was unsure of the whole situation, but he said we could get more money back filing this way. Well now, I checked our refund status on the IRS website and it says “there is a delay in processing your return.” I mailed our forms out on April 14th, it has been 13 weeks now. Could there be something wrong with how we filed??

Answer: Only you can know if your relationship falls under the guide- lines of a common-law marriage. But, if your tax accountant asked the right questions, and you gave the right answers, then he probably feels the common-law marriage is defensible before the IRS. Only problem is that the rebate has slowed processing times with the IRS – what normally takes 8-12 weeks is taking much longer this year – 12-20 weeks. It sounds like the IRS wants to take a closer look at your joint return and will probably get to it in the next two or three weeks – but that is just a guess on my part.

In order for a person to have a common law marriage, all of the following elements must exist:

Capacity to marry. A person must have the legal capacity to enter into a formal marital relationship in order to form a common law marriage. Examples of when a person would not have capacity to marry would include situations such as where one is too young to legally marry, or where one of the parties is already in a legal marriage to someone else and attempts to marry prior to obtaining a divorce.

Cohabitation. There is no specific amount of time the parties must live together, but cohabitation is a requirement of a common law marriage. A common law marriage could be found to exist in as little as one day if the other elements of a common law marriage exist. Likewise, a couple could live together for five years, ten years, twenty years, or even more, and not have a common law marriage if the other requirements are not met.

Consummation. Often referred to euphemistically as the assumption of marital duties or considered to fall within the scope of cohabitation, the parties to the common law marriage must have had sex in order for a common law marriage to exist. No common law marriage exists unless the relationship was consummated.

Agreement or Consent. A common law marriage does not happen by accident. To be a valid common law marriage, the parties must have the intention of entering into a permanent and exclusive marital relationship, whether that intent occurs by a formal agreement or by mutual consent. Whether the parties had an agreement or consented to be married is often inferred from the other factors making up common law marriage, particularly cohabitation and the next factor, public recognition.

Public Recognition. A common law marriage does not exist in secret. Part of establishing the existence of a common law marriage is showing that the couple held themselves out to the public as husband and wife. Examples of ways in which parties achieve public recognition of the marital relationship include filing joint tax returns, referring to one another as spouses in public, naming each other as beneficiaries on insurance policies, commingling of assets, the wife’s use of the last name of the husband, and other actions which show an intention to live openly as husband and wife.

Overlooked tax credit could pay off

Earned Income Tax Credit worth up to $5,657 — but isn’t taken by quarter of those who qualify, IRS estimates If there’s a bright spot in the recession, it’s that more people will get money back from the IRS through an often-overlooked tax credit.

1177-UCC #25-Winston Shrout audio-1099OID process: HOW TO STOP FORCLOSURE !!!

Question: my former employer went out of business and has not filed her 941 form for tax period ending june 2007?

will this effect me when i file my tax return in a couple of weeks.she has always had problems with the irs since i have worked for her the past 6 years. she went out of business with no notice and when i filed unemployment they had no record for one quarter of 2007 for wages. so i had to dig up an old paystub to prove i worked for her during that quarter. now i find out she has not filed the 941 for june 2007.

Answer: I am assuming you have your W2, and you agree with the amounts on the W2. In that case, you will have no problems.

The IRS will deal with your employer directly concerning the 941.

COBRA subsidy eligibility period extended through February

Workers who lose their jobs during January and February may qualify for a 65-percent subsidy on their COBRA health insurance premiums.

Clay Bloxham The Ent Life

Daley Determined to Sell Midway Airport

Photo by Kevin Robinson Following up on Mayor Daley’s successful privatization of Chicago’s parking meter system , and the cost-savings realized by drivers on the Spanish-leased Chicago Skyway, the mayor is gearing up to lease Midway Airport to a consortium of private investors. Crain’s is reporting that the city will meet a February 1 deadline to tell the Federal Aviation Administration what …

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Question: What are the benefits of starting a LLC instead of filing a Schedule C?

I’ve been doing some consulting work on the side and filed a Schedule C last year (and plan to do the same this year) as a sole proprietorship. My “office” won’t qualify for the IRS’ rules about claiming a home office, so I pay taxes on almost all of what I make. Would finding some other business structure help me save taxes?

Answer: There’s not much difference in tax benefits, the biggeet benefit in LLC is that you can’t have your personal assets given to a plaintiff in a lawsuit because you’ve segregated your personal life from the company’s.

6 Mistakes to Avoid When Converting to a Roth IRA

RISMEDIA, January 5, 2010—(MCT)—As years go, 2010 is on course to be a blockbuster for retirement-account owners. Starting this month, all Americans who own a traditional IRA— not just those who have modified adjusted gross income under $100,000—will be able to…

Ch. 2 IRS; LLC Tax

Dellums Announces Plan To Create 5,000 Jobs Over 3 Years

OAKLAND, Calif. — Oakland Mayor Ron Dellums Thursday unveiled a “Putting Oaklanders to Work” strategy that he said will help generate more than 5,000 jobs over the next three years.

The Law Offices of David M. Offen – Philadelphia Bankruptcy Attorney