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Started By
Message
Advice please, wife got a disturbing letter from the IRS today.
Posted on 6/22/12 at 11:11 pm
Posted on 6/22/12 at 11:11 pm
Before my wife and I were married, she had some disposable income and asked me to invest it for her. I put in $3000 for her and a few months later cashed out $3900 or so.
She got a letter today that says "EIC has been disallowed to due investment income exceeds $3100."
They are tagging her for $4,000.
Her initial investment was $3000 and she only cleared $900 and was done yet the IRS is valuing her investment income at $3,100+.
Gurus?
She got a letter today that says "EIC has been disallowed to due investment income exceeds $3100."
They are tagging her for $4,000.
Her initial investment was $3000 and she only cleared $900 and was done yet the IRS is valuing her investment income at $3,100+.
Gurus?
This post was edited on 6/22/12 at 11:12 pm
4
Posted on 6/22/12 at 11:25 pm to Scoop
Did you claim the 3900 on the tax return and put your cost basis at 3000? If not, that is likely the reason for the letter
Posted on 6/22/12 at 11:33 pm to LSU1018
I don't know. By the letter it looks like they are applying her entire investment as income which kicked her out of EIC when she actually only cleared $900 or so.
The EIC rule apparently is no investment income greater than $3100. Her investment income was only $900.
They want $4,000 for her $900 profit.
The EIC rule apparently is no investment income greater than $3100. Her investment income was only $900.
They want $4,000 for her $900 profit.
Posted on 6/22/12 at 11:39 pm to Scoop
they made a mistake, it happens...fix it
Posted on 6/22/12 at 11:48 pm to Zilla
She's freaking out but I told her there is no way she's on the hook for $4,000 for making $900 in the market. If she is, it's disgusting. Hopefully my friends here will tell me that she is not and how to get out of it.
Posted on 6/23/12 at 8:00 am to Scoop
There may be an easier way, but you can always file an amended return including the corrected Schedule D.
Posted on 6/23/12 at 8:23 am to Scoop
Seriously this is the easiest thing to fight. Just submit your cost basis documents from whoever you invested with.
Posted on 6/23/12 at 9:02 am to Scoop
Don't know how things are now but 20 years ago the IRS made a mistake with me. I explained why they were wrong. They ignored it. A friend told me 'they don't read appeals until you pay the money and then ask for it back.'
So, I paid the money. They read my appeals and sent my money back.
So, I paid the money. They read my appeals and sent my money back.
Posted on 6/23/12 at 9:09 am to LSU1018
quote:
Did you claim the 3900 on the tax return and put your cost basis at 3000? If not, that is likely the reason for the letter
This. File an amended return (1040X) with a corrected Schedule D. EIC payments are one of the items the IRS always examines very closely.
Posted on 6/23/12 at 9:50 am to BFIV
Thanks, guys. She was gonna take the letter to a CPA Monday but I told her I knew who to ask I instead.
Posted on 6/23/12 at 10:04 am to Scoop
Be sure to ask the sentencing judge to let your wife take her iPad with her when she goes to prison....
Posted on 6/23/12 at 4:58 pm to LSURussian
Posted on 6/24/12 at 10:03 am to Scoop
My guess...
She did not report the investment income and cost basis on her original tax return.
Thus, when the IRS got the notice from the Investment Co. that she withdrew $3900, they marked that entirely as investment income. The IRS has no way of knowing the cost basis unless you tell them.
She did not report the investment income and cost basis on her original tax return.
Thus, when the IRS got the notice from the Investment Co. that she withdrew $3900, they marked that entirely as investment income. The IRS has no way of knowing the cost basis unless you tell them.
This post was edited on 6/24/12 at 10:04 am
Posted on 6/24/12 at 1:24 pm to JPLSU1981
Further, the $4000 is not a tax on your investment income. It is the difference after the EIC is taken away. So dont misunderstand - you aren't getting tagged for making that sale.
Posted on 6/24/12 at 2:36 pm to Scoop
Pics of wife?
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