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Oops Got Another 1099, W-2, etc

2015-03-18 by Eva Rosenberg

yet another mistakeToday TaxMama® hears from various folks in the TaxQuips Forum and elsewhere with another common problem. “I filed my tax return and then got another W-2, 1099, or a corrected 1099 from my brokers. What should I do now?”

Dear Friends,

I get lots of questions from folks who leave something off a tax return, then realize it immediately afterwards.

Don’t panic.

Here’s what you do:

Wait about a week or so for the federal return to process. If you have a refund coming – when you receive the refund, you know the IRS is done with your return. Then go ahead and amend your Form 1040. Print out the revised form, not just the 1040X (for your files and to go with the state returns).

For people who have state tax returns that are affected, do the same thing if you have already filed it.

If you haven’t yet filed the state return or multiple state returns, use the amended 1040 (not the 1040X) as your starting point and companion to your state return(s).

See how simple that is?

And remember, you can find answers to all kinds of questions about filing errors and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

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Moving & Payroll

2015-03-09 by Eva Rosenberg

Multiple statesToday TaxMama® hears from various folks in the TaxQuips Forum and elsewhere with this common problem. “My client moved to a different state while working for the same company. His W-2 shows withholding for the former state, but none for the state he lived in. His employer won’t correct the W-2. What should we do?”

 

Dear Friends,

This problem is more common than you might expect. Let’s look at how this can be avoided for employees – and tax pros’ clients.

1) Understand this concept. It is not the employer’s fault or problem. The EMPLOYEES must review their paychecks when moving to a new location. You must be the one to take responsibility to ensure you have withholding for the correct state. If you do this from the very beginning, you won’t have a problem at the end of the year.

2) Tax professionals – when you work with a client who has moved before your tax appointment, ask to see a recent paystub and help ensure your clients are getting the correct state withholding.

3) Employees – file a change of address form with the IRS (Form 8822) and your former state, as well as the USPS. This will help ensure that you get all notices and checks to avoid potential problems and misunderstandings.

4) And to avoid identity theft, check your credit report regularly, starting about 2 months after you move to make sure the new people living at your old address are not accepting your terrific credit card offers and opening up new accounts.

And remember, you can find answers to all kinds of questions about moving issues and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

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TaxMama s TaxQuips Home Schooling

2015-02-23 by Eva Rosenberg

Homeschool Textbooks and Other Reading MaterialToday TaxMama® hears from Sharonda in the TaxQuips Forum with this fun topic, let me re-phrase. “I have a new client that home schools her children. What tax breaks are available to her?”

Dear Sharonda,

That’s an excellent question.

IRS Pub 529 talks about Educator Expenses . Alas, qualified education expenses for teachers do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education.

Here’s a good article about this topic. It refers to states that have tax credits…
http://a2zhomeschooling.com is a generally good site for people who home school.

TaxGirl offers an interesting analysis...but still ends up with my same conclusion.

Here’s something to think about. If this woman is home schooling, she probably knows other who are as well. They might be able to form a local organization where, perhaps there is a way to pool resources, cut costs, and share the teaching duties for the various subjects – as each parent may have an area of expertise to offer. By creating a school, they might be able to generate deductions.

And remember, you can find answers to all kinds of questions about home schooling and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 2MB) or listen now...

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Where Taxes are Fun
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Where you can you ask your tax questions
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Crowdfunding for Medical Costs

2015-02-16 by Eva Rosenberg

Crowds geting ready for crowdfunding Today TaxMama® hears from Josh in the TaxQuips Forum with this interesting question, let me re-phrase. “I want to raise money for a family member who is ill, using crowd-funding. What’s the best way to do this with the least tax impact?”


Dear Josh,

That is very kind of you. But the way you describe will hold YOU responsible for the income. You will get no deduction for the ‘donation’ to the family member.

Have this person open up a new bank account specifically to receive these funds. It must be in their own name and Social Security number. You may be co-signer on the account. You may not use the funds for your own benefit. Be very careful about that.

Medical crowdfunding sites specify that the donors will NOT get a deduction for
these donations. They are purely voluntary, as gifts. Your family member will not have to pay taxes on the funds.

Be sure that nothing is promised to the donors – no kinds of rewards or anything for their donations – or this could be turned into ‘sales’. Instead, as incentive, let them know that you, or the individual, will be posting updates and photos about his/her condition, mood, etc. And let them know where to find the updates – FaceBook, a WordPress site,
Blogger, etc. (all of them are free). FaceBook requires a login to use. The others don’t.

This is an interesting way for people to get help. And while the donations are not deductible, it’s a great way to help people you care about.
And remember, you can find answers to all kinds of questions about crowdfunding and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 3MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
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TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments


Asking After the Fact

2015-02-09 by Eva Rosenberg

ASK Today TaxMama® hears from several people in the TaxQuips Forum, with questions asked too late. Here are some questions that should have been asked before you entered into your financial transactions – not when you file your tax returns.

 

Dear Friends,

It boggles the mind to have questions come to us when it’s too late for us to help out. Here are recent questions, where we, or a competent tax pro, could have prevented or reduced the taxes – if only we had been consulted in advance.

1) Taxpayers live in a camper and work all over. They have no permanent home to be away from. None of their travel expenses are deductible. If they had done some planning in the first place, they could have established a solid tax home in Texas – and taken the necessary steps to qualify it as a home. Could have wiped out most of their taxes.

2) Taxpayers inherited an annuity from mom and split it six ways. NOW, they are asking about the tax consequences. The estate’s executor could be responsible for the taxes if the other heirs don’t pay up. She is responsible for the decedent’s final tax return, as well as the estate tax return. And now that she has distributed all the money, she’ll have to pay the costs herself if she can’t get the heirs to chip in.

3) Taxpayer is trading in puts and calls. After a year’s worth of activity, now he is asking about the tax treatment of his activities. Learning in advance, you can set up your records to give you the specific data you need at tax time. Knowing the tax effect as you go along, you can make trades to keep your profits high and taxes low.

4) Taxpayer is doing odd jobs for Grandmother and getting compensated. Is this income or a gift? And how do Grandmother and grandson handle the reporting? Naturally, this is asked after the filing deadline for W-2s to be issued to household employees.

My friends, when it comes to your finances, please, don’t begrudge the few measly bucks you must pay to a tax professional. Schedule a planning appointment before you do something costly – and stupid.

And remember, you can find answers to all kinds of questions about tax planning and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 3MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The #1 Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments



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