The IRS Audit Blog

Archive for March, 2010

Question: How do I handle this tax situation?

I used to work for a company that provided a 401k plan and when I left the company, they converted it from a 401k with T-Rowe Price to an IRA plan with T-Rowe Price as well. However, when it was in the 401k, it lost about 3,000 before it was transferred over. I received some tax documents which showed that my net gain was zero, but it does not show my losses on my 401k. That said, I am using TurboTax Deluxe to prepare my taxes so what should I do and how should I address this and still be compliant with IRS and tax regulations?

Answer: Gains or losses that happen while the money is in either a 401K or an IRA do not have to be reported. You report only (1) the amount that was “distributed” (transferred) from the first account, (2) that the “taxable” amount is $0, and (3) that the reason that the rest is not taxable is because it was a “rollover” (transfer to an IRA).

Fiscally Fit: Temper Tantrums

Authored by Stephanie May, NBR Summer 2009 Intern I began my Fiscally Fit blog as a way to take charge in my life. I realized I had a lot of work to do to learn financial responsibility before it was too late and I found myself in a much more desperate situation. So that’s what I did. With a positive attitude and a heart full of hope, I began to reform my irresponsible spending habits and …

The Power of the 401(k)

Question: U.S. employer hiring out-of-country consultant ~?

I am a U.S. employer needing to hire an out-of-country consultant for some work. Since this is my first time doing this, I need to know:

1) Are there any forms I need to file with the IRS when I hire this individual? Do I need to get a letter from him stating he is not a U.S. citizen?

2) This consultant will not have taxes taken out (of course). Is there a form I need to file at the end of the year with the IRS?

3) Is there anything I need to send this individual at the end of the year showing how much I paid him (much like a U.S. W2)?

Thank you for your time!

Answer: Get a letter from him affirming that he is NOT a US Citizen/resident.
And have the letter affirm that the work is NOT being done in the US.

Then you keep the letter with your contract.

No W-8BEN, ****NO***** 1099-Misc.

Power Companies Seek 8.2 Percent Rate Hike in West Virginia

Appalachian Power and Wheeling Power say they’re seeking an 8.2 percent rate increase in West Virginia

Tax Tips & Information : How to Find Tax Forms & Instructions

Question: Will I have to pay taxes to the IRS if a W-8Ben form is submitted?

I have a unique situation. I am a US Citizen living in the US and I just opened a checking account. I want to add my grandmother to my account who is a NON citizen and lives in Panama. I want to send her money every month using a debit card, but the bank is requiring for a W8Ben form to be completed by her. My question is, will she have to pay taxes on my income, since taxes have already been deducted through my place of employment? What is the purpose of this form?

Answer: Dear Nazanin,

Your grandmother will not owe any US tax on money you send her. The purposes of the Form W8 BEN are to show that no withholding is required by the bank on the money they send, and also to keep track of who is sending money out of the country and to whom. This is for catching money launderers, tax evaders, and terror supporters. There should be no tax effect for you. By the way, your situation is far from unique. That’s why the form exists. And it’s good of you to help support your grandmother.

Videotron Ltd. Announces Notice of Redemption for a Portion of its 6 7/8 % Senior Notes due January 15, 2014

MONTREAL, QUEBEC–(Marketwire – 06/17/11) – NOTICE OF PARTIAL REDEMPTION Videotron Ltd./Videotron Ltee 6 7/8% Senior Notes due January 15, 2014 CUSIP No. 92658TAG3 Pursuant to Sections 3.01, 3.03 and 3.07 of the Indenture (the “Indenture”), dated as of October 8, 2003, by and among Videotron Ltd. ( “Videotron”), a corporation under the laws of the Province of Quebec, each subsidiary guarantor …