The IRS Audit Blog

Posts Tagged ‘forms’

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

Question: When a bankruptcy discharged debts should a bank send a IRS 1099 as debt forgiven and show it as income?

My company filed for and was discharged in bankruptcy in Aug 2006. Bank of America sent an IRS 1099 showing they forgave the debt in Aug of 2007. They showed an amount of over $8,000.00 as income due to the “forgiveness”. I called them and they refused to correct the 1099 and said it was my problem not their’s and advised that I just throw it away since the company no longer exists and I will NOT be filing a return on it. The Company was an “S Corp” so when it existed the money flowed through to me personally. Should B of A have sent this a year late? Should I just throw it away (doen’t sound smart to me)? Is there an IRS form that I can fill out to correct the error if there was one. Didn’t bankruptcy discharge and eliminate this debt without them forgiving it? By the way B of A continued to send collection notices many times after the discharge, so this seems to be a stabdard with them.

Answer: The bank was correct in sending you a 1099-C. They cancelled the debt and you were the person not paying it back.

The bank was incorrect in telling you to throw the 1099-C away. When you file your tax return, you will postpone the 1099-C cancellation of debt income by filing a form 982. If you have remaining assets the form has you write them down in value. When you sell these at a later date, you may have taxable ordinary income then.

If you total your remaining assets (not only business, but all personal ones as well) by their book value and compare that to your total liabilities, you only reduce the book value to the point it equals the liabilities. Any further COD is permanently eliminated.

IRS tax workshops March 26

Taxpayers who may have difficulty scheduling a visit to an IRS Taxpayer Assistance Center during normal weekday business hours can visit the IRS offices located in Seattle, Everett, Bellevue and Tacoma on Sat., March 26 between the hours of 9 a.m. and 2 p.m.

IRS Tax Problem Help – Forms,website information

Question: Does anyone know if the IRS can dig up my past 2008 Federal Income tax 1040 and send to me?

Somehow I either misplaced it or it wasn’t placed in the packet when AARP tax-aide helped me last tax year. Is it possible that IRS can find a copy of this and fax it to me? I need this form in order to be approved for financing for a homeloan. Urgent message……………thanks

Answer: Yes, use form 4506 for a copy, 4506-T for a free transcript. If you need it fast, go to an IRS service center with proper ID and you should be able to get a transcript from them.

This Week in Credit Card News: Reward Offers, More Fees and Bouncing Debit Cards

Provided by LowCards.com

Printable Income Tax Forms

Question: what do i do if i missent my federal tax forms to the state treasury, and the state tax forms to the IRS?

do i need to re-send my tax forms to both agencies?

Answer: you need to send them to the right taxing agencies and make sure that you get them to the right places the second time

Tax Tip: 6 facts about choosing the standard or itemized deductions

When filing your federal income tax return, taxpayers can choose to either take the standard deduction or to itemize their deductions. The IRS has put together the following six facts to help you choose the method that gives you the lowest tax.

Removing IRS & Federal Tax Liens

How do I separate the emotions of selling a home?