The IRS Audit Blog

Posts Tagged ‘www irs gov’

Question: IRS Plan 125 (long question) – please help?

My co has been deducting our medical insurance as pre-taxed for years. When I have started with the co. we have been using QuickBooks for our payroll, then we switched to ADP Payroll for that. Now, the person who has trained me told me that our medical insurance is pretaxed. And we left it at that. I have never filed any reports to IRS (no has ADP).

Now we are setting up life insurance and looking at their paperwork I read that …”to utilize pre-tax deductions, the client company must establish and maintain a section 125 plan and comply with all relevant IRS regulations.” ! OMG! I don’t know if we have a plan set up with IRS, and we have never sent them any reports.

I am so confused… What should I do? I am scared to tell my bosses about this problem… Does anyone know if a co must file any kind of paperwork with IRS to (1) set-up this Section 125 Plan & (2) what kind of reports I need to send to IRS to report medical and life insurance deductions that were made pre-taxed.

Answer: There usually has to be some kind of written plan, at least internally in the company – not sure about IRS notification – goto www.irs.gov and search for section 125 cafeteria plans – they have publications you can download which should explain things.
Was everything section 125 before you started working there? If yes, don’t freak out about it. It should have been set up by senior managment

Apollo Group, Inc. Reports Fiscal 2010 First Quarter Results

PHOENIX—-Apollo Group, Inc. today reported financial results for the three months ended November 30, 2009.

Athens-Meigs ESC Section 125 Video

Question: Donations and tax deductions?

Can I donate items of clothing $500.00 one day and then again totaling $500.00 in the same year? The clothing and shoes I am donating are very nice and expensive. It seems like I can not because of this link I read.

You cannot take a deduction for household goods donated after August 17, 2006, unless they are in good used condition or better. A household good that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal. See Deduction over $500 for certain clothing or household items, later.

Deduction over $500 for certain clothing or household items. You must include with your return a qualified appraisal of any single item of clothing or any household item that is not in good used condition or better, that you donated after August 17, 2006, and for which you deduct more than $500. See Household Goods and Used Clothing, earlier.

http://www.irs.gov/publications/p561/ar02.html#d0e556

Answer: You can’t just split the donations across days. The $500 is for the year.

Also, be aware that you can only deduct the amount the items would be sold for at a thrift shop, even if they are very nice, and expensive.

The Savvy Senior: Tax help for lower-income seniors

Dear Savvy Senior: What are the 2009 IRS minimum filing requirements for seniors? My income was very low last year, and I’m thinking I may not have to file tax returns this year. What can you tell me?

Publication 17

Question: Any attorneys out there? Tax lien situation whereby IRS has garnished wages to the point of poverty; remedies?

This info is for a freind whom has consulted w/ an atty. and stated that the only option is a settlement. This party does not have the money for a settlement nor enough assets to sell off to erase the tax liability. All wages garnished and personal asset(s) i.e. car has lien attached. Bankruptcy won’t work due to this is non-dischargeable debt. This person understands the need to pay and has a good job-salary, but the IRS has left her/him with $333 to live on ea. month. Bascially poverty-stricken. No doubt the gov’t has legal basis to due this, but, but, I believe it’s unfair/ unjust to propel a person into dire straits with collection efforts. If the garnishment was not at the present level e.g. leaving this person with say $1000 to live on monthly, it would be affordable. I don’t think the IRS… tax system, was setup to render a preson homeless or otherwise. Thank you for any assistance.

Answer: Obviously, I don’t know all the details, but the IRS will usually levy wages only after they have been ignored for a long time. Your friend needs to come up with a payment plan, either a proposed installment payment plan (form 433D, I think) or a partial pay offer in compromise (form 656), along with a financial statement on form 433A. The forms are on the IRS web site http://www.irs.gov. Good luck.

North Hollywood Man to Serve 4 Years Probationi for Filing False IRS Claims

Los Angeles – On January 4, 2010, in United States District Court in Los Angeles, a North Hollywood man was ordered to serve four years probation and to pay $199,267 in restitution to the IRS related to a conspiracy scheme to defraud the United States with respect to claims, in violation of Title 18, United States Code section 286.

Tampa Tax Attorney discusses IRS Offer in Compromise OIC

Question: How do I calculate estimated tax taking into account the recent tax reduction?

Does the 2009 Form 1040-ES (http://www.irs.gov/pub/irs-pdf/f1040es.pdf) reflect the changes that were just passed by Congress after Obama become President? If not, how do I correctly calculate the estimated tax that I should pay according to the newly past legislation?

Answer: I always stick with the standard “100% or 110% of LAST year’s tax liability rule” and just bank any extra as needed if the projected tax liability appears to be exceeding that amount. If it comes in a little lower, I just roll the excess over to the next year to reduce the minimum required payments next year.

If it looks like income (and therefore the tax liability) is dropping precipitously I cut the quarterly payments as needed to meet the 90% rule for the current year.

Unsigned legislation never enters into the fray.

Weeding out the bad

New Yorkers who get paid to prepare other New Yorkers’ income tax returns are facing two new layers of government regulation designed to weed out the unscrupulous and the unskilled among them.

Tax Tips: Estimated Tax Payment

Question: Tax-exempty status – Examples of Package 1023?

I am in the process of forming a non profit in NC. Since I was able to view completed Articles of Inc. on the NC Secretary of State site I was wondering if there is a website where I could view the paperwork (1023, 990, etc) involved in the 501(c)3 process.

I am interested in viewing completed applications. Assuming that a tax-exempt organization is open to scrutiny, because of its status, I would think that one would be able to view these forms in their entirety, as opposed to instructions and blank forms provided by irs.gov.

Past incorrect answers have been:

Form 990
www.irs.gov/pub/irs-pdf/f990.pdf
instructions
www.irs.gov/pub/irs-pdf/i990-ez.pdf

See Application for Exemption
www.irs.gov/pub/irs-pdf/f1023.pdf

explanation of requirements:

IRS Publication 557 “”Tax Exempt Status for Your Organization”
www.irs.gov/pub/irs-pdf/p557.pdf

These are blank not completed forms.

Answer: Public disclosure FAQ from the IRS: http://www.irs.gov/charities/article/0,,id=96430,00.html

Ordering copies on CD/DVD from the IRS: http://www.irs.gov/charities/article/0,,id=150268,00.html Note that the (significant) costs here are waived for requests from the media as well as from other governmental agencies.

You can also subscribe to GuideStar.org though their website: http://www.guidestar.org/services/ds.jsp?gclid=CISf2aXDr40CFQIpFQodyR280A It’s not free, but it’s cheaper than buying the DVDs from the IRS.

Turner, Jones top SMU salary lists

June Jones, left, and R. Gerald Turner, right, are the highest paid employees at SMU with total compensations more than $1 million.

Internal Revenue Service (IRS) Form 990 – Are You Ready?