The IRS Audit Blog

Posts Tagged ‘tax’

Question: How do the different solar utility subsidy programs uniquely effect IRS Form 5695?

There are 2 different local utility subsidy programs widely available in the USA.
1. Up front Local Rebate with REC Assginment
2. Up Front Local Rebate with optional REC purchase program.

IRS guidance says I have to take my 30% residential energy tax credit on the non-subsidized system costs. However, in option 2, a utility is forcing me to assign my REC’s without a purchase agreement. As the utility has taken indefinitely the rights to my solar REC certificates as a requirement to get their “rebate” money, can I treat the rebate as a purchase of REC rights and write off 30% of total system cost?

Answer: If the utility issues you a 1099-Misc, you use the gross amount to figure your credit.
if the utility does NOT issue you a 1099-Misc, you use the net amount after subtrancting the utility rebate.

Related Stories

Earthtalk 11.25.2009 11:18 a.m. Dear EarthTalk: I’ve been following reports about President Obama’s stimulus package and what it may mean for creating green jobs. Beyond that, are there programs in place to help businesses switch to greener raw materials and/or to green up operations overall?

Recovery: Energy Credits – It’s Not Too Late

Question: How to file form 1098 for a foreign lender?

My lender is not a U.S. person (neither U.S. citizen or resident) and he receives my mortgage interest monthly, which is paid to his bank account in the U.S.A. He is supposed to file form 1098 and he has two questions: (1) As he doesn’t have Social security Number and Federal Identification Number, need he only put his foreign address and phone number? and (2) How to file this form with IRS —just download the form, fill it up, and mail it to IRS office?

Answer: Have *you* been withholding 30% of the interest payment and forwarding to the IRS as you were supposed to? Then at the year, you would issue the lender a 1042-S. These would be proof that you have paid the interest and that he paid his taxes on his US-source income. IRS pub 515.

As for filing the 1098, he files it if he’s in the trade or business of lending money. He files it with a W-7 application for the ITIN. He must order the form — it cannot be downloaded–and files it with a 1096. Note, he’ll also need to attach a note explaining why it’s late.

Thoughtless Taxation

This article appeared in the Washington Times on November 22, 2010. Treating variables as constants is a sign of a damaged brain. In the real world, almost any action taken by government is going to cause a behavioral response — and often one that is not intended.

Feb 17, 2010 – 13/16 – Dan Walkow

Question: REVISED: Mom passed away leaving my daughter as beneficiary on an Annuity?

Here is more specific information on my previous question: My daughter could not have the money until she turned 18. When she turned 18 she cashed out the annuity being a death benefit inheritence and took the money and put it away in a savings account for college. At the end of the 2009 year she was sent a 1099-INT form with gross disb. being $50, 219.00 (box 1) and taxable amount being $27,525.00 (2a). This was the only income she had and we paid over $5,000.00 in IRS taxes. Now after talking with others (not accountants) I’m being told that since this was an inheritance it was supposed to be tax free up to $100,000.00. We all are in Calif.

Answer: Only the portion that already existed when the death occurred is an inheritance. That is the only part that is tax-free. The taxable amount is the portion that was added during the years between the death and now, which is not an inheritance and is not tax-free.

Early income-tax filing not the best deal

The early bird doesn’t always get the worm. Moreover, said a consumer-finance expert in Penn State’s College of Agricultural Sciences, being in a hurry to file your federal income tax forms in pursuit of a quick refund isn’t always the best idea.

Free Minds TV July 23, 2010 (EP 166)

Question: Does the IRS really take 6-8 weeks when there is a delay/offset on your federal refund?

This is the first year this has ever happened to me. I only owed $100 dollars.
I filed on 01/16/2009 accepted on 01/18/2009. Supposely they mailed out the letter on 01/29/2009. still havent recieved the letter. It was federal taxes that I had owed. Sorry I should have been more detailed.

Answer: Depends who you owe. If you owed the IRS, it doesn’t take that long and you usually get your money on the regular refund cycle. If it was a different federal agency, it will depend on whether or not all the information is set up properly.

If they have correctly told the IRS that they only need the $100, then you should get the rest quickly. If they are still processing your account wherever you owe, it will take longer.

added: If you talked to IRS and they said they sent a letter but didn’t show the refund scheduled to go out, it sounds like they are still reviewing the past debt (and possibly this return if they debt was due to a filing error in the past) to make sure everything is in order before they do the refund.

IRS looking to mail out previously undeliverable refund checks

The Internal Revenue Service may want to cut you a check. Really.

IRS Refund Notice Scam Lie, From Scam And Relationship Education Services

Question: if my husband and i file bankruptcy, will the irs stop sending letters that we owe $5000?

It is from 2006. We go to H & R Block every year. Then next thing we know we get these letters.
It is $5000.00

Answer: No, the IRS will keep up with their collection actions.

Current tax debts cannot be cleared through bankruptcy. Only tax debts that are over 3 years old or older can be considered for discharge through BK. Further, if the debt is for a year that you have not filed a final return, the debt cannot be discharged regardless of its age. And if the debt is for a prior tax year, the return must have been filed at least 270 days prior to the BK filing before it can be included in the discharge.

If you file Chapter 13, that WILL stop collection efforts while the BK is in litigation and will stop the accrual of penalties and interest.

Of course, you need to be sure that the IRS debt is valid. I see collection letters all the time that are based upon incorrect assumptions by the IRS, usually because the taxpayer filed their returns incorrectly. The sales of stocks is a VERY common area where the IRS is wrong because the taxpayer screwed up.

Reporter’s Notebook: A tale of two Dianne Wilkersons

To her supporters and defense attorneys, former state Sen. Dianne Wilkerson was a voice for some of the state’s neediest and least powerful people, as well as a “flawed being, who made terrible mistakes.” According to federal prosecutors, the Roxbury Democrat was a politician who acted as if she was above the law, learned nothing from her past conviction, and broke laws from the outset of her …

IRS Letters and Notices