The IRS Audit Blog

Posts Tagged ‘charity’

Question: Can you help me report tax fraud of an unethical business?

If anyone needs the general information for reporting fraud here is the link: http://www.irs.gov/individuals/article/0,,id=106778,00.html. My question is the form asks for the business taxpayer identification number which I have no idea how to find. Any clues?
The business is an housing complex and therefore a corporation. Many people in my building have been told their payment was lost or misplaced because reciepts are not given and monies such as money orders are easy to lose proof of.

Answer: I am a Former IRS Attorney that assists individuals obtain rewards from the IRS for reporting tax fraud or any under payment of tax by a taxpayer. A new law went into effect two years ago requiring the IRS to pay between 15% and 30% of the amount of tax determined and/or collected based upon the information provided. There are a number of good web sites to find out more this program. Ours is located at www.rewardtax.com . (Note, the tax, penalty and interest must exceed $2,000,000 to qualify for the reward)

However, if you just want to report tax fraud you can simply complete IRS form 3949A. Here is a link to the form http://www.irs.gov/pub/irs-pdf/f3949a.pdf . If you are concerned about your identity, see instructions on page 2 for line 6. The IRS says that you do not need to identify yourself if it is a concern of yours.

As to the identification number, if it is a public corporation you will find it on the SEC website in the Form 10K. Otherwise it will be on a Form 1099 or Form W-2 that will be issued to you…hopefully.

Judge gives UBS client probation for tax evasion

By Jonathan Stempel

US CPS Victims Use Free Form Submit Child Slaughter State of Emergency Evidence Obama USDOJ MLK Bday

Question: IRS 1040 how to file taxes when occupation is unemployed (by choice)?

I’m not retired. But I have not worked in a number of years and every year around this time I am paralyzed by the question on my tax return about my occupation. I guess I could just write in what I last did for a job, but when I held a job, it wasn’t an occupation so much as a way to spend the day. I AM NOT A DEADBEAT! I have never received or applied for any assistance- period. My lifestyle is modest middle class. My income is derived from some smart choices I made when I was younger. My wife is employed full time and makes around $80k/yr. We do pay taxes of course, and would like to avoid being audited if for nothing other than not knowing what to write and leaving a question blank. Do I write unemployed, disinterested, unknown?!? None? Can this be left blank?
Thanks.

Answer: I work at a VITA (Volunteer Income Tax Assistance) Site and we use unemployed quite a bit with no problems.

Tax preparers are not all the same

Do you pay someone to prepare your annual tax return? If so, you’ve got plenty of company.

Question: New IRS Charitable Giving Rules for 2006 or 2007? Can I still e-file?

Do the new IRS rules under the Pension Protection Act of 2006 prohibits donors from declaring contributions to charitable organizations unless they can produce records of the transactions impact 2006 filing, or is it for 2007? Also, either way, if I have the records of proof, but file electronically, do I need to do anything, or do I merely hold on to the records for a potential audit? In other words, can I still e-file, or do I need to mail my return in with the documentation of the donations?

Answer: yes you can still e file the only thing is that youll have to keep those receipts from the organizations just in case you do get audited. If you dont get a receipt you can also use a canceled check or some other document that shows you did in fact contribute.

Many tax credits, deductions overlooked

If you thought you had the tax laws figured out, guess again.

Tips from the IRS – Charitable Contributions

Question: Occasional Ebay seller – which income tax form should I use?

I only sell on Ebay occasionally, clearing out old stuff from the house. But a few things I sold turned out to be in demand, so I ended up making about $600. Which tax form should I use to report this? The Schedule C business form says only to use that form for business done on a regular basis, not to use that form for reporting hobby income, but to use the ‘line 21 for other expenses’ to report it instead. But the explanations for line 21 don’t fit either. Do I need to attach a form? The IRS web site mentions ebay earnings as business expenses or capital gains…but the capital gains form doesn’t look like it applies to ebay sales at all.

I just can’t understand all this IRS mumbo-jumbo – can someone please help me? I can’t afford to hire a CPA, but I don’t want to get into trouble for not reporting income

Answer: You will put it straight on the 1040. If you use the 1040 long form it will be put on line 21 under Other income and write Hobby income since you are not engaged in a business to make a profit. Remember you are allowed to deduct expenses for selling the stuff on eBay, but you cannot claim a loss for hobby income.

Read Tax topic 426 for more on hobby income.

Standard deduction amounts increased

Married couples who’ve been submitting joint returns for a while will notice their standard deduction amount has jumped substantially in recent filing years.

Tax Information Help and advice on Filing Your taxes IRS

Clearly, Medicaid will pay only if you have few assets. Logically, then, make sure you don’t have assets. Therefore, transfer your assets to your children now. This will make you poor, and by being poor, you’ll qualify for Medicaid.

If you don’t’ transfer your assets to your children, you’ll just spend everything you own on long-term care costs until you have nothing left anyway. Either way, you’ll be broke. So wouldn’t you rather give your assets to your kids instead of to a nursing home?

Four problems with transferring assets

If you think this sounds reasonable, watch out for these four big problems:

Problem #1: Yeah, Right
You’ll find it very hard to give everything you own to your (spoiled rotten!) kids just as you’ve reached that time in your life when you can start enjoying yourself. In other words, this recommendation, un-usually doesn’t go over very well.

Try convincing your parents to give you all their money.

“No, really, Dad, you need to give me everything you own right now. It’s for your own good!” Yeah, right.

Problem #2: Medicaid is aware of this trick

If you made gifts during the 36 months prior to filing your claim for benefits, Medicaid will deny this claim – 60 months for gifts you make to a trust. This rule is specifically intended to prevent people from asset-shifting. And please note an important change in Medicaid rules: If you file a claim at any time during the 36-month waiting period, Medicaid will restart the clock. Therefore if you plan to use this strategy, assets must be transferred well in advance of the need for long-term care, and be sure you don’t file a claim until you’re sure the 36-month waiting period has expired. Also, be aware that transferring assets to a spouse does not shield the assets from Medicaid.

Have you brought assets into your marriage?
Many people who marry later in life bring assets into the marriage, like Ruth. Her husband died when she was 47, leaving her his 401(k), their home, plus life insurance proceeds. Five years later, Ruth remarried. She kept all her assets in her name and filed a separate tax return. When her second husband needed long-term care, he quickly spent down all his assets. But Medicaid permitted Ruth to keep only $2,000 per month; all her other income had to be spent on her husband’s care before Medicaid would pay benefits. Thus, over the next several years, Ruth was forced to spend down to the poverty level, too.

Regardless of whose money it was or where it came from – inheritances, savings, retirement plans, or insurance proceeds – Medicaid will deny claims until both spouses spend virtually all their money on long-term care. The fact that the money originally belonged to the community spouse does not matter.

Problem #3: Attempts to asset-shift are stymied by the IRS
Under gift tax rules, you may give to any one person only $11,000 per year (you may give unlimited amounts to your spouse). So, even if you try to give your money away, the IRS will restrict the speed with which you may proceed.

Problem #4: This strategy is unethical…
Please remember that Medicaid is funded by taxpayers to help the truly needy of our society – not as a middle class tax dodge to protect your assets.

Problem #5: …and Illegal, too!
Congress knows that few consumers have the imagination or knowledge to effectively execute an asset-shifting strategy. So, to discourage professional advisers from sharing this information, Congress passed a law that made it a felony for advisers to counsel or assist consumers in their efforts to shift assets. Therefore, don’t bother asking your lawyer, accountant, or financial adviser for help; the smart ones won’t provide it.

Donate for tax breaks? IRS wants proof

Year-end holiday giving and cleaning tend to get people thinking about a little year-end tax planning, say, extra tax breaks for charitable contributions. To count for the 2009 return, individuals and businesses must have made their donations to a charity by Dec. 31.

Cash Gifting and the IRS: An Urban Myth BUSTED! www.GiftingAlert.com