Thursday, April 28, 2011

You Won a Cash Prize!! Don't Spend All of It ---> IRS

That's right, the IRS wants to share in your good fortune. If your wondering if a particular kind of income is taxable, you should probably assume that it is. The IRS generally says that all income is taxable, unless they tell you that it isn't. You may recall a famous TV show survivor who is having problems with the IRS because he did not pay taxes on his winnings. In fact, he has done prison time and it looks like he may be headed back to prison for not paying his taxes. Things have clearly gotten out of hand in this case. Most of the time, there are penalties and interest to pay if you are late with your taxes, not jail time.

If you won the lottery, you'll probably receive the IRS Form W-2G from the lottery commission. Most of the time, gambling proceeds are reported on Line 21 of IRS Form 1040.

So, if Vegas or the lottery pay off, don't forget Uncle Sam's share. 

Brycast Financial Planning in Austin Texas --- We Can Help
Income Tax Preparation in Austin Texas
contact: service@brycast.com  http://www.brycast.com/
Enrolled Agent; Investment Advisor



Tuesday, April 26, 2011

Errors on Your Income Tax Return...How to Correct

It happens. The remedy is to amend your return using IRS Form 1040X. An amended return can only be a paper return; it cannot be e-filed. Here are some guidelines for amending returns

1) If you are amending to claim a refund you have 3 years (including extensions) after the date you filed your original return or 2 years after the date you paid the tax, whichever is later.

2) You generally don't have to amend a return for just a math error; the IRS will fix it.

3) Be sure and tell the IRS why you are amending the return. There is space on pg 2 of the form for this.

4) Attach all changed schedules and other supporting docs, such as a correct W-2, etc.

5) If you are expecting a refund from your original filing, wait until you get your refund to file the amended return.

Instructions at  http://www.irs.gov/pub/irs-pdf/i1040x.pdf
Form at http://www.irs.gov/pub/irs-pdf/f1040x.pdf?portlet=3

Brycast Financial Planning in Austin Texas --- We Can Help
Income Tax Preparation in Austin Texas
contact: service@brycast.com  http://www.brycast.com/
Enrolled Agent; Investment Advisor Representative