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Personal IRS Problem

 
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Bribby View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Bribby Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:41am
Originally posted by mzmee 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?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote freedom76 Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:43am
Sounds like the same thing we have for the boys. The money market accounts they have are not theirs until they turn 18. Until then, both my husband and I can withdraw any monies we want. So the fact that she did it before you turned 18, makes sense. Just let her pay what is owed. Don't get too upset over it. I told my boys if they fluck up in HS, we are spending every last penny. If they get scholarships, then the money is theirs!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote ThoughtCouture Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:43am
Originally posted by Bribby Bribby wrote:

Originally posted by ThoughtCouture 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...
 
well, if you agree the irs probably has already ammended the tax return for her to include schedule d themselves anyway.
 
if you disagree and file schedule d, the amount owed will still probably be the same...unless your mom changes something else on her return.  when the irs does calculations they calculate the MOST that could possible be owed...meaning they don't factor in any deductions or other write offs.  in this case, your mom probably doesn't have any other write offs.
 
so, yeah, you can just tell her to agree and pay. the amt owed will likely be the same anyway.


Edited by ThoughtCouture - Jan 03 2013 at 10:45am
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Post Options Post Options   Thanks (0) Thanks(0)   Quote ThoughtCouture Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:46am
oh wait.  you filed a return yourself, right?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote ThoughtCouture Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:48am
Originally posted by Bribby Bribby wrote:

Originally posted by mzmee 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?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Bribby Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:49am
Originally posted by ThoughtCouture ThoughtCouture wrote:

oh wait.  you filed a return yourself, right?


Yes I did, with the W2 I received from work and I got back what taxes they took out, so they were saying like there was something wrong because I didn't document all of my income, but I didn't know about that money so that's why it wasn't included, they received info I had more income and then that's why they sent the notice.
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Post Options Post Options   Thanks (7) Thanks(7)   Quote iSMILE13 Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:49am
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
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Post Options Post Options   Thanks (3) Thanks(3)   Quote mzmee Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:51am
Originally posted by Bribby Bribby wrote:

Originally posted by mzmee 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?


If it is paid, they will close the case and will "go away".
 

From what I understand about tax consequences on stock when they are held for longer than a year, this looks like the tax is based on the sell amount ($14,000) and it includes capital gains tax because the stock was held long term (greater than a year). 

The amount of liability can be reduced if there is proof of purchases. Then what they do is subtract the purchase amount from the sell amount. They tax you on the difference. 

So instead of having a $1700 liability on that $14,000. Lets say you have purchase statements that shows the total purchase price of $9000. 

They will deduct that $9000 from the $14000 to come up with $5000 and you will only be taxed on that $5000 which will be a much smaller tax.


Edited by mzmee - Jan 03 2013 at 10:53am
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Bribby Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:55am
Originally posted by ThoughtCouture ThoughtCouture wrote:

Originally posted by Bribby Bribby wrote:

Originally posted by mzmee 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.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Bribby Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:56am
Originally posted by iSMILE13 iSMILE13 wrote:

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


What is tax credits?

See the way things are is all messed up! Since I live with my parents they claim me on the taxes but they still never get any money and have to owe. SO I let my baby's dad claim the baby bc he gets alll of this money back . I want to get some money dang it! lol Not owe, i barely turned legal and i'm owing smh
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