The IRS Audit Blog

Posts Tagged ‘tax irs’

Question: Pay Taxes on Gifted Life Insurance?

My mother died recently and I had to update my father’s life insurance beneficiary.
The form required witness signatures from two people who were not beneficiaries, so I set up my oldest brother as the only beneficiary and my younger brother and I signed as witnesses, with the understanding that after the oldest brother received the money he would distribute it to the rest of us. This way the oldest brother could also cover funeral expenses off the top.
There are 5 of us altogether and $250,000 in benefits.
It just occurred to me that though life insurance benefits are tax-free, gifts of over 12,000 are taxable.
Will the rest of us be taxed because this money is a gift from our brother? Or will the IRS recognize that this is simply the paying out of life insurance benefits?

Answer: if your only reason for putting your oldest brother as beneficiary is so you and younger brother can be witnesses, then you are setting yourself up for potential problems.

get your neighbor and his wife to be witnesses. they should do this as a favor and expect nothing for it in return. or get anybody else who is willing.

even if your older brother would never stiff you, what you did is a very bad idea. what if he gets married to a woman who later gets greedy and God forbid he dies. guess what? its ALL her money. no matter what you say its hers and hers alone. or what if he later changes his mind all on his own?

watch the people’s court and see how many cases involve family that thought they would never run into any problems.

IRS Wants Receipts, Not Your Word, to Value Charitable Giving

December 21, 2009 (Detroit Free Press) 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 make their donations to a charity by Dec. 31.

DON’T BUY ANYTHING UNTILL YOU READ THIS!SCAM! SCAM ALERT!GIFTING WORKS!$500,$10,000 CASH

Question: is there an age restriction on the w-9 tax IRS form? How does that work?

just as the question asks. Im about to do a business deal with someone and they require me to fill out a w-9 irs form. Now i need to know if there is an age restriction on it because im currently 16.
Thanks

Answer: There is no age restriction. You could be a day old to 1001 years old and still be asked to fill in the form.

If a business is asking for it, keep in mind that they will pay you and then issue a 1099-Misc for the amount at the end of the year. The IRS will consider this self-employment income and expect you to pay the 15.3% SE tax on it (again, no age cutoff.)

Hatboro council looks into alleged ethics violations

Officials on Hatboro Council will decide individually whether or not they will file ethics complaints to the state concerning two of their own, after council’s former vice president found that Democrats Nancy Guenst and Aleta Ostrander had tax liens they did not report in their 2006 to 2008 statements of financial interest.

Why To Use IncNow to Form Your Delaware Corporation or LLC

Question: 1099-MISC form and W-2?

I am doing my boyfriends taxes by printing the forms off the IRS.GOV website…do I include the wages from the 1099-MISC form on the 1040-EZ, or is the 1040_EZ only for W-2’s? On the 1099 the only amounts listed are under non-employee compensation.

Answer: You can’t use Form 1040-EZ. You MUST use Form 1040 plus Schedule C or C-EZ. If the net income on the Schedule C is $400 or more you also need to attach Schedule SE to calculate the self-employment tax.

IRS: More money for some deductions

People who do standard deductions will see more money in their tax returns this year.

Question: How do I comply with tax and employment laws when hiring a full time housekeeper?

My father-in-law needs to hire a full time housekeeper and he wants to know if there is a resource out there that can help him comply with all IRS tax laws and department of labor laws. Also, he’s like to know if he needs insurance or any other things he should be concerned about. Thanks for the advice!

Answer: IRS Schedule H Instructions describe Household Employment Taxes:

http://www.irs.gov/instructions/i1040sh/index.html

Usually the person hired as you describe would be an employee, so your father would have to do as instructed on Schedule H. If your father hires someone from a service, he would just pay that service, no 1099 would be issued. It is unlikely that a full-time housekeeper would be considered an independent contractor/sole proprietor.

If your father needs a full-time employee to help him because of a medical condition, some of those expenses may be deductible as medical expenses. Read about medical expenses here (see Nursing Care, Home Care):

http://www.irs.gov/publications/p502/ar02.html#d0e1858

Beware of IRS’ “dirty dozen” tax scams

The IRS has issued its 2010 “dirty dozen” list of tax scams, including schemes involving return preparer fraud, hiding income offshore and phishing.

NO INCOME TAX LAW FORMER “IRS” AGENT JOE BANNISTER PART 3

A look at the many capital gains rates

Capital gains tax is a complicated game with high stakes for investors. We break down the rules.

Tax Tips & Advice : How to Give Tax-Free Gifts