Personal IRS Problem

mzmee wrote: If you can find the cost basis of the stock you may be okay. The amount to be taxed will not be on the $14,000 that was received but the difference between the cost of the stock and what it was sold for. Ask her if she had purchase statements from when she bought the stock. Ask about all statements that she received on a quarterly/monthly/bi-annual statements that were received as this may reflect additional purchases from automatic reinvestments(if that were the case).  The amount owed may be from them imposing a tax on the whole $14,000 but if the purchase statements can be found this can help reduce tax liability.  Good luck, do not procrastinate, and communicate with IRS/meet their deadline. If not when they assess and bang their gavel on what has to be paid, you're stuck with it.  Cost Basis: The original value of an asset for tax purposes

And my mom is saying well what if it comes out for us to owe more? Could that happen?
And if we don't do that and just pay the $1700 could it all just go away?

Bribby wrote: ThoughtCouture wrote: they will not throw you in jail lol.  you can only go to jail for tax evasion and to proove that is very difficult.    anyway, the $14K is what the mom sold some stock.  you only have to pay taxes on the gain (what the stock was sold for - what the stock was bought for).  the $1,700 represents the taxes owed on the gain plus interest and penalties.   just tell her to pay the $1,700 and ammend her tax return to include schedule d. The last part is what I don't understand. Right now I have a letter telling me to agree or disagree, she wants to agree and pay the money, the tax guy said disagree and file schedule d...

Edited by ThoughtCouture - Jan 03 2013 at 10:45am

Bribby wrote: mzmee wrote: If you can find the cost basis of the stock you may be okay. The amount to be taxed will not be on the $14,000 that was received but the difference between the cost of the stock and what it was sold for. Ask her if she had purchase statements from when she bought the stock. Ask about all statements that she received on a quarterly/monthly/bi-annual statements that were received as this may reflect additional purchases from automatic reinvestments(if that were the case).  The amount owed may be from them imposing a tax on the whole $14,000 but if the purchase statements can be found this can help reduce tax liability.  Good luck, do not procrastinate, and communicate with IRS/meet their deadline. If not when they assess and bang their gavel on what has to be paid, you're stuck with it.  Cost Basis: The original value of an asset for tax purposes And my mom is saying well what if it comes out for us to owe more? Could that happen? And if we don't do that and just pay the $1700 could it all just go away?

1. Tell your mama to stop claiming you. You are missing out on refundable tax credits
2. She needs to pay all not what you may owe....a red flag is already in the system. You don't want to be disallowed from credits in the future. A schedule d is pretty simple to complete.
3. VITA may be able to prepare it free of charge
4. If she can't afford to pay all of it at once, she will need to payment arrangement or something. Dint ignore it because that could cause penalties, interest, garnishing wages etc

Edited by iSMILE13 - Jan 03 2013 at 10:51am

ThoughtCouture wrote: Bribby wrote: mzmee wrote: If you can find the cost basis of the stock you may be okay. The amount to be taxed will not be on the $14,000 that was received but the difference between the cost of the stock and what it was sold for. Ask her if she had purchase statements from when she bought the stock. Ask about all statements that she received on a quarterly/monthly/bi-annual statements that were received as this may reflect additional purchases from automatic reinvestments(if that were the case).  The amount owed may be from them imposing a tax on the whole $14,000 but if the purchase statements can be found this can help reduce tax liability.  Good luck, do not procrastinate, and communicate with IRS/meet their deadline. If not when they assess and bang their gavel on what has to be paid, you're stuck with it.  Cost Basis: The original value of an asset for tax purposes And my mom is saying well what if it comes out for us to owe more? Could that happen? And if we don't do that and just pay the $1700 could it all just go away?   does the statement from the irs show how the $1,700 was calculated?

No it doesn't from what my mom is saying she keeps asking how they calculated but I don't know myself.