TaxMamas TaxQuips

Today TaxMama® hears from Blake in the TaxQuips Forum who is upset. “I bought a used car last December for $8,000. The car was owned by an individual who apparently had a business bank account where he deposited the money. The bill of sale just says his name on it, no company. How can the state of Georgia charge me $700 in taxes plus a $115 penalty on a car I bought from an individual? I don’t have the coins laying around for this kind of “surprise” expense. I was fully under the impression the car was bought from an individual and so were the two witnesses who were there when bill of sale was written up.”

Dear Blake

I don’t think this has anything to do with whether the seller was a business or an individual. It has more to do with your registering the car and transferring title to you.

I don’t know specifically about GA, but in most states any purchase of a vehicle triggers either a sales tax (if a dealer sells it) or a use tax (if a private party sells it). When the dealer sells a big ticket item like a car, he collects it from the buyer and sends it to the state. When a private party sells the car, the buyer needs to pay the state himself.

You could certainly try to get the penalties waived. Try talking to the Georgia Taxpayers Advocate office and see if they can help you. Clearly, you didn’t understand that you were responsible. Let’s face it, there are so many tax laws on the books, how is an average citizen supposed to know them all?

You won’t get the taxes waived, but good luck trying to get the penalties waived. Sometimes, asking nicely, politely and patiently, government officials will go out of their way to help you.

And remember, you can find answers to all kinds of questions about use tax issues and other tax 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!]

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Today TaxMama® hears from Ada in the TaxQuips Forum with a deceptively difficult question. “My father is a non-resident alien with a non-business U.S. checking account that he opened over 15 years ago. He wants to give me and another sibling (both resident US citizens) the money from that account (split equally to about $20k each). What are the reporting requirements and tax liabilities for him, my sibling and myself?

Dear Ada,

I asked Roger B. Adams, EA, our resident international tax expert, to research this for you. After researching this Mr. Adams’ has determined the following:

According to IRC sec. 2501(a) and Reg Sec. 25.2501-1 a nonresident alien donor is subject to gift tax on the transfer of real or tangible property situated in the US. The question is whether or not a bank account is “tangible” property and the answer seems to be, NO it is not. Cash, on the other hand, is tangible property.

Gifts are not taxable to you since they are not considered income. So you and your sibling are not liable to pay tax on the gift. It seems your father’s best option is to transfer his interest in the account to both of you. Thereafter, you would do with the money as you wished.

Ada responds that the bank won’t allow them to be added to the account. Since they must open a new account, wouldn’t this end up costing Father gift taxes?

TaxMama has way around this problem. Do open the new accounts, if you must. However, set up the new accounts in your FATHER’S name, with you and your sister as co-signers. That way, it’s his account. You’ve now been added to the account – not given cash. You can each use the cash in the account under whatever agreement you sibling and your father decide.

And remember, you can find answers to all kinds of questions about non-resident alien tax issues and other tax 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!]

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TaxQuips

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TaxQuips Forum

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TaxQuips Forum

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Today TaxMama® hears from Kelly in the TaxQuips Forum who cares about her friend. “A friend’s home will soon be going into foreclosure. He’s owned the home for 2.5 years and we’re trying to figure out if he’ll have to repay the $8,000 tax credit he received as a first time homebuyer. I’ve read that if the house sells and there’s no gain you’ll owe nothing. If the home is in foreclosure how is a gain calculated? Would it be of any benefit to try to do a short sale on the home versus the foreclosure? He’s planning to file for bankruptcy as well. I’m just wondering if there’s any legal way around the $8,000 repayment?”

Hi Kelly,

Good question.

Let’s see – to avoid paying back the Homebuyers Credit, you must live in the place for three years. So, one of the nice things about filing bankruptcy is – you can stay in your house for quite a while longer. If the BK can keep him in the house until the three years are up

1) No worries about repaying $8,000.
2) Free rent for as long as the BK continues.

However, if they don’t stay in the house for three years and end up owing the repayment, the bankruptcy will not help them since the tax return won’t even have been filed yet.

When it comes to selling and short sales, you need to be SURE there is no profit. Remember, you have two things happening when you run short sales, foreclosure or just signing over the property with a deed in lieu of foreclosure.

1) You have the sale – which may be the amount of the loan, or it may include some accrued interest, depending on whether the lender has modified the loan and added interest at the end. That might result in a profit. The profit would mean that some or all of the $8,000 might have to be repaid.
2) You have cancellation of debt income – (perhaps not, if it’s the original loan) which is subject to ordinary taxation.

Back to the Homebuyers Credit. If the house is sold at a loss, or with no profit at all, there won’t be a repayment of the tax credit. More details -

And remember, you can find answers to all kinds of questions about repaying the homebuyers tax credit and other tax 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!]

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Ask TaxMama

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TaxQuips

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TaxQuips Forum

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TaxQuips Forum

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Today TaxMama® hears from Saroj in the TaxQuips Forum with a valid concern. “I have been doing taxes for last 20 years or so. I was thinking of taking the EA exam. But I added Financial Advising to the practice (HD Vest) and QuickBooks, also. I am 62 years old; so I don’t know how long I will be doing taxes. With all the regulations and continuing education requirements, what do you think is more beneficial? Should I still get my EA or just pass the Registered Tax Return Preparer Exam (RTRP) and keep doing what I am doing?”

Hi Saroj,

That’s a good question. And the concept applies to any senior who is contemplating a career change or upgrade. So let me give you my perspective on the issue, starting with a key question.

Are you feeling particularly feeble, mortal, or in imminent danger of dementia?

If you are like most 60-year-olds these days, you’re in the prime of your life. You still look great in jeans, and you can hike for miles. You can expect a good, solid healthy 20+ years of lucidity and functionality.

How do you want to spend it?

Yes, you can take the RTRP exam and continue doing what you’re doing – and be just fine.

Or you can add some services to your practice – like being able to get a signed power of attorney from your clients and help them with their tax problems. You won’t have to refer them to others when they face tax audits or collections problems.

So what do you think?

And remember, you can find answers to all kinds of questions about career issues and other tax 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!]

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

Ask TaxMama

Where taxes are fun and answers are free

TaxQuips

The number ONE free tax podcast online

TaxQuips Forum

When you can ask questions, too

TaxQuips Forum

Where you can add your comments, too

Dear Family,

Another blink, another week goes by. We’ve been busy trying to get the classes set up – and teaching classes this week. The Overview of IRS Collections course was terrific. I am really enjoying teaching with Michael Rozbruch CEO of Tax Resolution Services.

more->

One of the things he is involved with is to help establish national standards for companies that provide tax representation services for folks in trouble with IRS. You’ve probably heard a lot about certain companies being prosecuted by IRS, and a variety of states, for ripping of their clients, or not delivering on claims to be able to slash taxes. Oh, you haven’t heard? Let’s see…TaxMasters recently filed for bankruptcy as a result of the prosecutions. JK Harris shut down in January after a flood of complaints to consumer affairs offices. Last year, we lost Roni Deutch, among others. So yes, we do need some standards in this industry. And it’s generally better if we can self-regulate, than to have IRS step in. Anyone interested in attending the first meeting of the 2012 Legislative & Regulatory Conference, it will take place on May 20-21^st in Washington, DC.

This week’s Money Funnies is in honor of Mothers Day. It’s all about child-rearing. Enjoy!

Also, speaking of Mothers Day, Susan Holtgrefe, EA had a great idea for mom. She gathered together some special family pictures, put them into a photobook. You may have already thought of that. Susan’s contribution? WalMart will print it in a day. So, procrastinators – you still have time to produce something unique and lovely for Mom. So, Happy Mother’s Day Weekend!

In today’s IRS News, the IRS provides information for community property taxpayers and domestic partners. This is especially important, in light of recent legislation in North Carolina. And CCH, a Wolters-Kluwers Company, sheds some light on the future of certain legislation – like capital gains, alternative minimum taxes, and more – in More Questions Than Answers for 2013.

This week’s Equifax Blog topic is all about After Filing Taxes: Responding to Letters from IRS. You’ll be getting some of those soon, if they haven’t already started. This will help you avoid tax-fright. Instead, you can get into the tax-fight – since most of those notices are somewhat wrong.

We held the last session of Everything You Want to Know About the EA Exam last night. There were some excellent questions about continuing education requirements for PTIN-holding tax professionals. You can replay this week’s session – right here.

If you want to see all the TaxQuips from earlier in the week, drop by here. Topics include Audit Risk, Zero Tax on Capital Gain, Opps, Missed a W-2 ! and Taxable Retirement Income .

The TaxMama SunShades arrived last week. I love it! This is so much better than the clunky accordian fold ones. You can just fold it in half when you take it off (or scrunch it back down to about 5 inches) – and then pop it back up when you park. Although I got them for presents to the students, I like my SunShade so much that I’ll give you a chance to buy them, too. (Quantity discounts are built into the shopping cart, if you want more of them for your friends or clients.)

TaxMama’s EA Exam Review Course is open for registration. The early-bird discount is over. But if you want to join the class, please sign up now, so you can get the books and software in time.

1) Family members get a special 20% discount until May 31^st – only on the full course – Live or Self-Study

2) Live students course materials include a terrific resource – the TaxBook WebLibrary – which includes materials for the 1040, as well as all business taxes – plus the All States resource. There are three years worth of detailed guidance. Our self-study students can also buy it – at a discount.

Note: Present members of the class – do NOT re-register. You don’t have to pay for the class again. Here is the order form for 2012 books and software.(Must log into Board)

Remember to follow TaxMama®’s Tweets – http://twitter.com/TaxMama

Have you grabbed the TaxQuips Widget for your phone, social networking page, website, or…? You’ll get the TaxQuips as soon as they published – about an hour before they are distributed in by e-mail. It’s a fun gadget. Just pick up the code and paste into your site or phone app. http://www.widgetbox.com/widget/taxmamas-taxquips-daily-tax-podcasts

Let’s address a few tidbits of news – and go back to work!

Weekly Equifax blog is still going strong.
http://blog.equifax.com/tax/
Filing Taxes: Paperwork For Your Tax Professional
Avoid Paying Penalties on Estimated Taxes
Learning from Your Tax Filing Mistakes
After Filing Taxes: Responding to Letters from IRS

MarketWatch
http://www.marketwatch.com/Journalists/Eva_Rosenberg

BizFilings
What is the Best Entity for Your Business?
The Non-Profit as a Business Model
Tax Issues Regarding Copyrights and Trademarks
Business Licenses You Need and Trust
Now That You Have an LLC, it’s Time to Make Tax Decisions

ITS A WAHM THING
Home Based Business Accounting Software Options
Writing off your Family’s Vacation

You can find daily TaxQuips into YouTube videos http://www.youtube.com/taxmama1 http://www.youtube.com/taxmama1#p/u

As always, we love your feedback, opinions and ideas.

You are what makes all this fun – and interesting!

http://taxmama.com/asktaxmama/ask-taxmama-issue-641

TaxNerd gear makes a bold statement year-round.

Hugs from your favorite TaxNerd,

Eva Rosenberg, EA

Your TaxMama® www.TaxMama.com

 

Your TaxMama® is watching…out for you.

 

www.TaxMama.com

www.TaxMama.com/TaxQuips

www.IRSExams.com

www.TaxNerd.net

 

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TAX CALENDAR

http://taxmama.com/tax-calendar/

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05/15/2012 Employers Make Monthly Payroll tax deposit on the 15th of each month
06/15/2012 Individuals, Farmers & Fishermen Pay 2nd Quarter Estimated Tax Payment
06/15/2012 Corporations – 2nd Quarter Estimate Tax payment
Due 06/15/2012 Estates & Trusts 2nd Estimated Tax Payment
06/15/2012 Employers Make Monthly Payroll tax deposit on the 15th of each month
06/15/2012 US Taxpayers Overseas Individual Personal Returns due
06/15/2012 US Taxpayers Overseas Claim Foreign Earned Income
06/15/2012 US Individuals Overseas Personal Return Extensions due
06/30/2012 File Form TDF 90-22.1 – Report of Foreign Banks with $10,000 anytime during year

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EA EXAM NEWS & SOLVING THE TAX PUZZLE

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Take TaxMama®’s 2011 EA Exam Review Class

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I’m geting notes from people who are passing their exams. How exciting!

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