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Personal IRS Problem

 
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ThoughtCouture View Drop Down
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Post Options Post Options   Thanks (2) Thanks(2)   Quote ThoughtCouture Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 10:57am
Originally posted by Bribby Bribby wrote:

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.
 
oh ok so this is assoicated with YOUR return.  so yeah...like mzmee said, see if she still has the acct statement (with the stock purhase and sell...she may need to rerequest it) because there is a chance they are assessing tax on the full $14K when you only need to pay on the gain.
 
you can then calculate for yourself to see if the amount they say you owe is more than what you actually owe.
 
also, look at the statement form the irs to see if they assesed penalties and interest...
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ThoughtCouture View Drop Down
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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 10:59am
Originally posted by Bribby Bribby wrote:

No it doesn't from what my mom is saying she keeps asking how they calculated but I don't know myself.
 
ok....request that from the irs...that is, how they calculated the $1,700.  they should have sent you a statement detailing this anyway.
 
i have a feeling they did not take into account how much the stock was purchased for.  which means they are trying to over charge you.
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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 10:59am
Originally posted by mzmee mzmee 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?


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.


Ohh ok I understand you now. So, how can I get this information? I just tell my mom to ask the institution she had the stocks at for proof of purchases to be sent to us?
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Post Options Post Options   Thanks (3) Thanks(3)   Quote Tbaby Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 11:02am
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


IA with everything except the first line.  If you are being heavily supported by your parent/s, they/she have a right to claim you since they/she are paying most of your expenses I gather.  If you were on your own, then yes you can claim yourself.

Tax credits are money "given" back to you--it decreases the amount you owe.

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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 11:02am
Originally posted by ThoughtCouture ThoughtCouture wrote:

Originally posted by Bribby Bribby wrote:

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.
 
oh ok so this is assoicated with YOUR return.  so yeah...like mzmee said, see if she still has the acct statement (with the stock purhase and sell...she may need to rerequest it) because there is a chance they are assessing tax on the full $14K when you only need to pay on the gain.
 
you can then calculate for yourself to see if the amount they say you owe is more than what you actually owe.
 
also, look at the statement form the irs to see if they assesed penalties and interest...


Okay thank you so much. Yes it has to do with my return it is all under my name. I see they did put $39 interest. But okay this is what the Assessor was saying on the phone get the info because the transaction is incomplete. File the schedule D and return the form saying I disagree. But i'll only do this if the amount comes out less? But it should from what you're saying.
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Post Options Post Options   Thanks (2) Thanks(2)   Quote ThoughtCouture Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 11:02am
Originally posted by SamoneLenior SamoneLenior wrote:


I thought it was ideal to not get (a lot of ) money back (also not to owe)

Question: Why Shouldn't I Get a Large Tax Refund Every Year?
I like getting a tax refund at the end of every year. Why should adjust my withholdings so I don’t get one?
Answer:

Many people consider a tax refund a great way to save money or a nice way to get a bonus at the beginning of the year. But in reality you are giving the government extra money each month interest free when you receive a large tax refund. If you adjust to get a smaller refund you get the money throughout the year, and you can use it to do the things you want to now instead of waiting until the end of the year. If you do have a large refund this year, create a spending plan for your refund so that you can use the money effectively.



is this wrong?


 
that is correct.  it is not cute to get a huge refund...lol
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Post Options Post Options   Thanks (0) Thanks(0)   Quote mzmee Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 11:09am
Originally posted by Bribby Bribby wrote:



Ohh ok I understand you now. So, how can I get this information? I just tell my mom to ask the institution she had the stocks at for proof of purchases to be sent to us?

Yep. Ask if she has the original purchase statements. If not, she can ask the institution for duplicates. Now a days, most institutions will charge a fee for duplicate statements so be ready for that as well. 

Depending on the company or fund the stock was held, be sure you all have information on if there were any stock splits during the time the stock was held as this can affect capital gains as well because this will be considered a purchase. 

You have to account for every share that was sold. 
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Post Options Post Options   Thanks (2) Thanks(2)   Quote mzmee Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 11:25am
Originally posted by Bribby Bribby wrote:

Originally posted by SamoneLenior SamoneLenior wrote:


wait, she must have forged your signature

I have accounts in my name but I had to sign so they could be opened


She said it was so "college thing" that she opened when I was younger and cashed out when I turned 18 but this was in June 2011, I didn't turn 18 until October 2011

Wow, that sucks. 

Just to help you understand this a little better. She sold the stock when you were technically a minor because she is able to have full control over the account. 

BUT for tax purposes, they put the liability on you because as of December 31, 2011 you were no longer a minor. See how they do this ish??

Why didn't she just transfer the stock to your name solely upon you no longer being a minor??? 
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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 11:29am
Originally posted by mzmee mzmee wrote:

Originally posted by Bribby Bribby wrote:

Originally posted by SamoneLenior SamoneLenior wrote:


wait, she must have forged your signature

I have accounts in my name but I had to sign so they could be opened


She said it was so "college thing" that she opened when I was younger and cashed out when I turned 18 but this was in June 2011, I didn't turn 18 until October 2011

Wow, that sucks. 

Just to help you understand this a little better. She sold the stock when you were technically a minor because she is able to have full control over the account. 

BUT for tax purposes, they put the liability on you because as of December 31, 2011 you were no longer a minor. See how they do this ish??

Why didn't she just transfer the stock to your name solely upon you no longer being a minor??? 


I have no idea I didn't even know these accounts and stocks existed until I got the letter
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Post Options Post Options   Thanks (2) Thanks(2)   Quote ThoughtCouture Quote  Post ReplyReply Direct Link To This Post Posted: Jan 03 2013 at 11:48am
Originally posted by mzmee mzmee wrote:


Why didn't she just transfer the stock to your name solely upon you no longer being a minor??? 
 
she probably wanted to have the money still under her control...
 
either that or she didn't fully recognize the tax implications of pulling the money out...


Edited by ThoughtCouture - Jan 03 2013 at 11:48am
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