The IRS Audit Blog

Posts Tagged ‘forms’

Question: Tax forms line 70? 1040?

I had a new baby this year, so I think I am qualified for the added stimulus check, but the paper says you have to add two lines and see if there more then 1200. I don’t know how to do the additional tax credit. I usually just use line 66 for that. If anyone could help it would be greatly appreciated.
Gross YTD- 19198, Federal YTD- 1350.53, Three qualifiing children, married filing jointly, I’m going to college and he is working full time. Thanks!

BTW- I know how to do the rest of the taxes, I just could’nt figure out the stimulus check part. Thanks! Here is the links to the forms I used.
http://www.irs.gov/pub/irs-pdf/f1040.pdf?portlet=3 FORM 1040
http://www.irs.gov/pub/irs-pdf/i1040.pdf INSTRUCTIONS
http://www.irs.gov/pub/irs-pdf/f8812.pdf FORM 8812 LINE 66

Answer: The way the form works is that line 70 refers to work sheets to complete.

If you filed married filing jointly and received a stimulus payment of $1200.
then you maxed out unless you had a child in 2008 that you did not have in 2007. This would entitle you another $300.

If you filed last year and made approx the same as you do this year. your stimulus payment was $300 +300+(300 times 2 )or $1200. Now if you filed you would have $300 +300 + ($300 times 3) or $1500..

You have an additional $300 on line 70. You would max out for 2 on the EIC or $4732.00. The rest you said you can do.

Tax Tip: Choose the tax form that best fits your needs

To file your 2009 individual tax return, you’ll have to decide which form to use: the 1040, 10A or 1040EZ. Here are things to consider when deciding which form to file.

January Tax Prep Instructions

Question: Simple Trust: Are dividends and capital gains taxed as ordinary income?

I am filling out form 1041 for a simple trust (which only contains 3 mutual funds).

This year, there were approximately $1500 in dividends and $4500 in capital gains.

Using the form, it looks like everything is being taxed as ordinary income (vs. 15% max capital gains rate).

Is this correct?

Also, if the trust were to be dissolved and mutual funds transferred to person who trust was set up for (without selling any mutual funds), would the IRS still view this as a sale and repurchase and expect taxes based on those “sales” next year?

Answer: Michael, I had the same question with respect to form 1040, and the answer is beyond Schedule D. The IRS downloadable forms now download the form separately from the instructions. You are correct, Schedule D gives no indication of what you should do with the numbers you calculate. I am not a tax professional, but I went to the last page of the Schedule D instructions http://www.irs.gov/pub/irs-pdf/i1040sd.pdf and found the Schedule D tax worksheet. This is where it starts to break down your ordinary income from dividends and capital gains and losses. It may or may not be applicable to form 1041 that you are filling out, but there will probably be another worksheet that you can use. I, like you, saw that the form 1040 was simply calculating the sum of ordinary income as well as dividends and capital gains. By the time you finish the worksheet, I believe you will then see how they are being calculated differently and where you should put those numbers.

Free financial aid event offered to those bound for college, technical schools

It is financial aid season, and anyone pursuing higher education in 2010 is invited to attend College Goal Sunday Feb. 14 at the Ashtabula County Joint Vocational School.

Question: Can withheld tax reported on a 1099-R be allocated to beneficiaries on Decedent’s Estate Form 1041?

This was from an annuity that was liquidated and the payer withheld about 25% of the taxable proceeds. Can this be passed through to the estate’s beneficiaries on Form K-1? The IRS instructions are unclear and I’ve gotten different answers each time I call the IRS!

Answer: If the annuity was liquidated after death, the withholding should be allocated to the estate. Deceased people can’t generate tax liabilities because they can no longer earn income. Their estates can.

IRS Details Exemptions from E-file Mandate

The Internal Revenue Service has provided guidance to tax preparers on the circumstances under which they can be exempted from the electronic filing mandate and mail paper copies of their clients’ tax returns instead.

Question: How many large cash gifts can someone give?

My FIL is very ill and wishes to distribute some of his savings.
IRS Publication 950 says he can give $12,000 to an individual without either party having to claim it…but can he give multiple 12k gifts to different people????

Answer: You can give gifts of up to $12,000 in a year to any number of individuals. You can give $12000 now and another $12000 in Jan 2009.
Read more about gift tax http://taxipay.blogspot.com/2008/03/us-gift-tax.html

IRS Tax Tips for the 2010 filing season – #14

Five ways to obtain IRS forms and publications.

RE/Search magazine plug from IRS The Cutting Edge 1986 reseach V. Vale

Question: Exchange rates when doing your taxes?

So, I’m filling out my 2008 taxes (I got a 6 month extension). I’ve been living in Japan, so I earned my money in yen. I’m supposed to convert the yen to dollars for the tax form. There are websites that have official exchange rates… but which exchange rate should I use? Should I use the current one, even though the income I earned was in 2008? Or should I use the exchange rate for April 15, 2009, when my income taxes were originally due? Or some exchange rate from 2008? Anyone have any idea how this works? I could call the IRS, but their office won’t be opened for a long time, and I would like to get working on the form today.

Answer: The IRS actually wants you to use the rate on each day you got paid or the rate on each date when you paid items which would lead to a tax deduction.

Or if you didn’t do it, the IRS will allow a yearly average rate. For Japan for 2008, the rate was 103.466 yen to the dollar.

http://www.irs.gov/businesses/small/international/article/0,,id=206089,00.html

West Virginia Delegate Pleads Guilty to DUI Charge

West Virginia Delegate Alex Shook has pleaded guilty to first offense DUI.

PART 4A: Do you have enough facts together about this Madoff loss to benefit you on your 2008 taxes?