The IRS Audit Blog

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What’s Happening

Valley Night Live’s Classic TV Night Valley Night Live presents “Classic Television Night.” Performances are Friday, April 1 at 6:30 p.m. and Saturday, April 2 at 6 p.m. at the Valley Union High School’s old gym. At Friday’s performance, dessert will be served, tickets are $7 and at Saturday’s performance, dinner will be served, tickets are $12.

Senate Session 2011-02-28 (16:11:22-17:15:59)

IRS places tax on stocks sold

Q: I sold some stocks and mutual funds a few years ago at a loss. Since I had no other taxable income, I did not bother to file a tax return. I just received a notice from the IRS assessing a huge tax for the stocks and funds I sold.

Foreclosure & Short Sales: Tax and Deficiency Problem

Question: Turbotax says I need to send estimated tax payments (using forms 1040-ES) in 2008. Is this true?

My wife and I did not realize that we should have modified our allowances on our Forms W-4 when we got married. As a result, we had too little withheld from our paychecks in 2007, and had a tax bill of $1,500 (married filing jointly). I filed our return using TurboTax, and it told me we will need to submit estimated tax payments in 2008 (using forms 1040-ES). However, the instructions for 1040-ES state that we may be able to avoid this by updating our forms W-4 (which we have already done). Is this sufficient to avoid sending the estimated tax payments? If so, how do we notify the IRS that we have made these updates to our withholding? We have always received refunds in the past and have never submitted estimated tax payments before.

Answer: It depends upon how much you are making. Firstly, if you and your wife combined are earning a relatively high gross income, the IRS withholding tables will not be accurate. Look at your W-2 ‘s and you and your wife’s withholdings in 2007. Divide the Federal tax withheld by your gross pay. If you and your wife were both single in 2006, 6.5 to 7.5 % may well have been enough. However, your incomes are combined now and you may BOTH need to have 6.5 to 21.3% withheld, depending upon how high your income is and whether you get hit with alternative minimum tax. Check your first paystubs after the new W-4′s you filled out go in to effect. You may have to remind payroll. It may still take 6 pay periods; 3 if you are paid every 2 weeks.

If you find that very little more is being withheld from your wife’s salary and/or your salary {or no more: I’ve seen that, too!}, you will want to go back to Payroll and point out their mistake. If that doesn’t work, you should send in a little estimated income tax.
On the irs.gov website, you will see the tax tables, which I have attached. Estimate your itemized deductions for 2008, multiply how many exemptions you think you will have for 2008 and subtract from what you estimate you and your wife’s gross income will be for 2008. That will roughly give you your taxable income. Divide the tax in the tax table by the taxable income in the tax table. This will give you an idea of what income tax liability you will face in 2008. Keep in mind that if one of you stops working that your gross income will be lower; may be much lower depending upon when during the year you stop working. Looking at the tax table and dividing your 2007 tax by your 2007 taxable income will give you an idea. The IRS tax table will give you an idea because this is an election year, and your income tax is not likely to rise in 2008. Good luck.

The Most Confusing Part Of The Income Tax Code

Okay, it’s no American Idol, but there’s lots of impressive competition this April for the title of  “Most Confusing Part of America’s Income Tax Code.”  That’s not surprising, considering that the basic 1040 instruction booklet now runs to 179 pages and National Taxpayer Advocate Nina E. Olson has branded  tax complexity the most serious problem facing taxpayers. In fact, preparing a tax return …

How To Find Tax Forms

Fiesta Bowl report: Lavish expenses

Fiesta Bowl investigators have found evidence of potentially illegal employee conduct and spending irregularities that could jeopardize its non-profit status and prestigious role in college football’s national championship series.

House Session 2011-01-20 (09:00:57-10:01:21)

Question: Anyone Else Had Direct Deposit Issues?

Ok, I’ve read all the posts about the refund direct deposit issues and now I’m worried. I keep checking the irs site and it has said that the DD date is the 6th and if it’s not there by the 11th to contact the bank, which I did yesterday, once by phone, and she said that there could’ve just been a delay and that it may be there today, then the teller at the office said that DD are posted as they receive them and nothing has showed up. This confuses me..I don’t know if it’s the irs, or the bank. I have to wait until tomorrow to contact the irs according to their website I just want to know what the deal is, it’s very annoying…….My GA state refund was DD in like a week, so I know I got the right bank info. BB&T is the bank, anyone else use this bank and had any issues? I have my paychecks DD never had a problem there.

Answer: I’m having the same problems. My original DD was scheduled for 2/6. On 2/6 the date changed to 2/10. Now it’s the 10th and I still don’t have any money. The irs hotline said if I didn’t get anything by the 10th to call back but what’s the point when they don’t answer the phone anyway. I’ve tried calling the irs several times but I can’t get to a live person. I keep getting sent to automated system. I am completely frustrated at this point. I did however receive my state refund in 5 days after it was accepted. The problem clearly isn’t with my bank. I used Turbo Tax online which sends the money through Santa Barbara Bank & Trust and they have no answers for me either. I’ve done my taxes the same way for the past 55 years and have never encountered so many problems. Can anyone help? Perhaps a phone number to a live person at the irs.

100+ Upcoming Social Media & Tech Events

Every week, Mashable puts together a calendar of upcoming social media and web events, parties and conferences. In the meantime, here are some…

Freedom to Fascism Star Dying in Prison SAVE SHERRY JACKSON