Tax Time 2000 |
Chief, Communications & Congressional Affairs
Internal Revenue Service, Delaware-Maryland-D.C.
Wednesday, March 15, 2000 at 1 p.m. EST
The countdown has begun. Whether you do it yourself or you hand over your W-2s to a professional, you will need help on how to navigate this year's tax waters. So stop grumbling, and let us help.
Dom LaPonzina, Chief of Communications for Delaware, Maryland and D.C. district of the IRS joins us Wednesday at 1 p.m. to answer your tax questions and help beat the deadline for once in your life.
Below is today's transcript.
Dom LaPonzina: Well hello there fellow taxpayers, it's Wednesday at 1 pm and, as promised, I'm here to help you navigate the tax filing season by answering your federal tax questions and also providing you with helpful information about changes, tax assistance, electronic filing, etc. So..... I'm ready if you are, I'll do my best to answer as many of your questions as possible. If, per chance, I don't get to your particular question, just remember that the IRS tax assistance line is open 24 hours a day, seven days a week at 1-800-829-1040. Let's get started!!!!
Welcome - I take a pounding every year this time since my son became an adult and my income went up after graduating from college. I did pick up a husband along the way so that helps a little. I'm a renter in the District and over $55K. Is there anything else I can do to decrease the tax burden placed on me? I'm getting practically no federal or state service -don't talk to me about the roads- - yet I'm paying through the nose. I sock away as much money as possible into my 401-k- but every year I end up with a tax bill I can't afford. Please don't suggest that I increase my withholding. If Uncle Sam takes any more I'll be claiming him as a dependent.
Signed In Love with her Country but just can't afford it.
Dom LaPonzina: I can empathize with you. The best thing you could do is to switch from being a "renter" to being a "home owner".
Home ownership DOES bring tax advantages over renting, i.e. mortgage interest deduction, real estate tax deductions, etc. You aren't getting either of these tax reducing deductions as a renter. Keep contributing to your 401 k, its a great tax reducer and even better if your employer is matching part of your contribution. Hope this helps!
i have been tryting to fix problem with taxes that i have from 10 years ago and have been unsucessful. i have tried calling , writing letters and no answer . what do you suggest ?
Dom LaPonzina: The IRS has offices in most major cities. Drop by in person or you may contact our Taxpayer Advocate Service at 1-877-777-4778. The Taxpayer Advocate Service is specifically set up to help taxpayers in your situation. Give them a call or visit your nearest office.
If I decide to retire in another country, what is tax liability regarding, Government retirement, 401K, IRA's? Also are deductions in a foreign country -i.e. charity and taxes- deductible here?
Dom LaPonzina: U.S. citizens pay taxes on worldwide income, so, regardless of where you choose to retire, your pension, etc., will be taxable. Deductions allowed by foreigh governments do not apply to U.S. taxes.
I am my parent's dependent,and do not have to file a return on my 1999 income. Can I still open a Roth IRA?
Dom LaPonzina: Sorry it's taking a while, the computer is sluggish today.
Yes, you may still open an IRA, as long as you had earnings during 1999.
Fort Washington, Maryland:
My parents claimed me on their 1998 taxes not knowing that I filed my taxes claiming myself. We were sent a 1040X form to fill out. Do we both have to resubmit out taxes or just one of us? Also, how do we know who has to resubmit the form?
Dom LaPonzina: Your parents, if entitled to claim you as their dependent, get the option on their return. Its not a choice for you.
Therefore, since they did claim you, no change needs to happen on their return. The change must be made on YOUR return only and may be done on the 1040X you received.
The former District Director who retired was reputed to be a brilliant compliance expert. I am reading that compliance efforts across the IRS have markedly diminished, including in the Delaware-Maryland District, which includes the District of Columbia. What plans are there to maintain compliance rates and the revenue flow, which will become very important should there be a downturn in the economy? Are there any plans to recall the former District Director from retirement to lead compliance efforts and revitalize the IRS in the Delaware-Maryland District?
Dom LaPonzina: As Commissioner Rossotti has said repeatedly, our mission is to administer a tax system that is fair to each taxpayer and to ALL taxpayers. That means providing courteous service in a FAIR manner as well as enforcing the laws in a fair but firm manner.
AS FAR AS YOUR REFERENCES TO FORMER DISTRICT DIRECTORS. ALL OF MY FORMER BOSSES HAVE TOLD ME THEY HAVE NO PLANS TO COME OUT OF RETIREMENT.
This may seem like a really esoteric sort of question, but in the DC area it might end up applying to a number of people. I am filing electronically and have run into a hitch with my -Federal Government- employer's Federal ID Number. If I input it exactly as it appears on my W-2, I get a message that the "F" at the end is not a valid character for a Federal Employer ID. My agency has been less than helpful in answering my question as to whether I can simply leave off the "F" and have my return processed correctly. I'd appreciate any suggestions or sources of information you could give me.
Dom LaPonzina: An employer identification number, like a social security number, is 9 digits long, no more, no less!
I am 24 and in a good 55K+ job. I am single and rent. What kinds of tax shelters are available for me other than Roths?
Dom LaPonzina: Similar to an earlier question. Consider buying a home rather than renting. Ownership brings mortgage deductions, real estate tax deductions, etc., which are not available to renters. Also be sure to fully fund your 401 K at work, if you have one.
I divorced from first wife 13 years ago. As part of separation agreement we agreed that an apartment we had in Washington D.C. would be solely mine after paying alimony. I finished paying alimony about 10 years ago, but could not transfer title due to inability to pay mortgage. I continued making payments on the property and got a small income, not enough to have to pay taxes on since my total taxable income was way too low -I am with an international organization and pay no taxes on salary-. I want to transfer title to apartment now and want to avoid any tax consequences for first wife, who had nothing to do with the property. How do I do this?
Also, she never declared income or deductions on said property. That allright?
Dom LaPonzina: Usually property transfers, incident to divorce, carry no tax consequences. But, to be certain that your specific situation qualifies, I suggest you contact a Tax or Real Estate Attorney for unique guidance on your situation.
Last year I joined a nonprofit volunteer search-and-rescue organization that required me to purchase specific equipment and supplies. Can I deduct any of these costs? I'm assuming I can't deduct the value of my time.
Dom LaPonzina: Your out of pocket expenses would be deductible as "Charitable Contributions" if you itemize. Your time, however, carries no deductibility.
This past year, my wife converted a conventional IRA to a Roth IRA. We got a 1099 form in the mail indicating that the converted amount, $9,000, is taxable. I thought the Roth IRA made the tax burden easier.
Dom LaPonzina: The Roth IRA does carry tax benefits that differ from Traditional IRAs. The income reported on your 1099 was from the Traditional IRA NOT the Roth.
I have in the past claimed my two children as dependents. During 1999, they earned approximately $3,000 each from part-time employment. Since they are both teenagers and full-time students and I provided more than half their living costs, I intend to claim them as dependents again for 1999. How do I proceed to get their withholdings recouped? And what is recoverable--just income taxes, or are state disability and Social Security taxes subject to recovery?
Dom LaPonzina: They will want to file their own tax returns to claim any refunds to which they may be entitled. The refund would only be on their income not on social security paid and credited to them.(Be sure that they DON'T claim themselves as a personal exemption on their return, since YOU claimed their exemptions on YOUR return.)
You may want to have them refile form W-4 where they work and claim exempt so that no tax will be withheld and you won't have to file for them next year...assuming the current situation remains the same.
We purchased a new home and our old home is being rented out. Do we get to write off interest from both homes?
Dom LaPonzina: YES you DO.
Main house interest deduction may be claimed on your Schedule A as an itemized deduction and Rental house interest may be claimed on Schedule E.
I owe a small amount of unpaid taxes to the Internal Revenue Service, under $2,000, and am making monthly payments on this account. I noticed that only $18 a month is being applied to the principal balance. Does the IRS continue to add penalties even though I am paying them? That is in addition to charging me interest every month.
Dom LaPonzina: Unpaid taxes are subject to interest (currently 8%) and a "failure to pay" penalty of 1/2 of 1 percent per month.
My mtg. company escrows funds to pay the real estate tax on my house. It neglected to pay the tax in 1999 but did so in 2000.
I assume that I will not be eligible to take the property tax deduction for tax year 1999 since the tax was paid in 2000. Am I correct? Thanks
Dom LaPonzina: Real Estate taxes are deductible in the year paid, So it looks like you'll have a double deduction in 2000, unless your mortgage company does the same thing this year.
I have begun to buy and sell stocks and make money on these investments, and I no longer have a source of income from which income taxes are routinely taken. What new reporting do I need to do quarterly, and what form must I file, to pay estimated taxes in advance? How do I get the form?
Dom LaPonzina: You'll need Form 1040ES available for downloading on the IRS website at www.irs.gov. Look for it under the heading "Forms and Publications". The form contains four vouchers which you will file quarterly with your estimated tax payment.
Mr. LaPonzina: Over 15 years ago, I bought a couple of shares in a limited partnership, which went in the tank soon thereafter. It's still limping along, and issuing forms K-1 every year. The forms never come out until late March, so I can never file until then!! Isn't there a an earlier deadline for these to be sent out? If so, what can I do to make the partnership follow the rules? Thanks!
Dom LaPonzina: You are a partner, therefore, you own part of the company. If you want the K-1 to come out sooner YOU and your Partners, especially, the managing partner, need to agree to get them out sooner. There is no specific date by which the law requires them to be provided. However, it's usually to be out in time to allow the partners to file their returns TIMELY!!!!
Thanks for the sesion Mr.LaPonzina. My question: I worked as a paralegal for several months at a law firm three years ago and they never sent me a w-2 form. As a result, I filed for an extension at the time but haven't done anything since. I know that they have several other immigrants who work there as "independent contractors," all of them who have never filed. They did take deductions from my paycheck. Help...
Dom LaPonzina: From your question, I'm really not sure whether you were an EMPLOYEE or an INDEPENDENT CONTRACTOR yourself. If you were an employee, you might check your last paycheck stub to see if it contains "year to date" information that you could use to complete your return. If you were an independent contractor, you should have receive a form 1099-Misc. reflecting you payment. You, do not need to attach the 1099 to your return. So if you kept good records of your independent contractor income, AND I HOPE YOU DID, you should be able to complete the return.
If you were an employee, and don't have the check stub year to date info I mentioned above, contact the IRS for further assistance with your former employer. We're available 24 hours a day, 7 days a week at 1-800-829-1040 or visit your nearest IRS office open weekdays ,and saturdays till noon, during the filing season.
Is there any tax relief for a person, married filing separately, not living with spouse for over 12 years -because of religious beliefs - am not divorced or legally separated-, maintaining a separate household -with all expenses involved- and no dependents.
P.S. I think if there is a common-law marriage, there should be a common-law divorce.
Dom LaPonzina: I'm afraid not!
In January 1998 I mistakingly opened TWO Roth IRAs in MY name -totalling $4,000-, instead of one each -for $2,000 each-in my name and my spouses -we are married filing jointly and qualify by income-. Can my Credit Union correct this past error by simply transferring one of these ROTH to my wife's ownership -as I had intended to do in first place, but misunderstood the rules-? Thanks
Dom LaPonzina: Answer is too long to do here. Generally, IRA corrections must be made by the due date of the return for the year in which the mistake occured. You are PAST that time period. I suggest you look at IRS Publication #590 which contains all of the specific rules on IRAs. This pub is available on the IRS website at www.irs.gov under "forms and publications". You can also give us a call at 1-800-829-1040 and we'll have the time to be able to go into the details for your unfortunate situation.
My husband is a liquor salesman and keeps quite a large stock of products and promotional items in our basement -about 1-4 of a 1670 sq. foot area-. I am unsure about whether this is a deductible item.
Dom LaPonzina: Doubt it. Unless you can show that the room is used exclusively for business purposes, I think you're out of luck. But I'll bet you could throw a heck of a party in that basement.
My wife's father gifted us shares of common stock. We sold some of it and I need to know what cost basis I need to use to figure out our profit. Would it be her father's cost basis, the price of the stock the day we received it, or something else?? Thanks
Dom LaPonzina: Assuming the father was living when he gifted the stock to you...your cost would be His (the father's) basis in the stock when he purchased it. If you inherited the stock, your basis would be the trading price of the stock on the Date of the Father's death. (called a Stepped Up basis)
How long on average should it take to get a refund? I mailed my tax return mid February and I'm still waiting. thanks.
Dom LaPonzina: If had filed an electronic return....you would have your refund by now. E-filed returns issue refunds in about 2 weeks. Paper filed returns take about 5 weeks. One other tip....to speed up these time frames even more...elect to have your refund "direct deposited" into your checking or savings account. This shaves about 4 - 5 days off the wait time since we don't have to print and mail you a check.
Bottom Line....FILE ELECTRONICALLY FOR FASTEST REFUNDS.
THAT'S ABOUT ALL THE TIME THEY'VE GIVEN ME TO HELP YOU TODAY. I HOPE I WAS ABLE TO GET TO MOST OF YOUR QUESTIONS.
PERHAPS WE CAN SCHEDULE ANOTHER ONE OF THESE TAX CHATS BEFORE THE FILING DEADLINE OF APRIL 17TH.
HAVE A GOOD DAY AND I WISH YOU MANY HAPPY RETURNS!
That's it for today. Happy filing.
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