Question - Filing Gift Taxes

Live forum: http://forum.freeipodguide.com/viewtopic.php?t=78207

illnovah

11-01-2009 12:11:12

I have 3 gift taxes to file (2 from last year and 1 from this year).

What happens if I don't file them?

Family is going through a tough time right now and I was wondering if I could file them NEXT year..

Will I get audited??

zr2152

11-01-2009 12:23:23

[quote9c64e64fdd="illnovah"]I have 3 gift taxes to file (2 from last year and 1 from this year).

What happens if I don't file them?

Family is going through a tough time right now and I was wondering if I could file them NEXT year..

Will I get audited??[/quote9c64e64fdd]

Not sure. The site(s) that you got them from will report your earnings to the IRS and you will get a 1099 from that company or companies.


Also, it can depend on how you do your taxes.

dmorris68

11-01-2009 14:19:41

Legally, you must claim them in the year they are reported. If you have been 1099ed then the IRS already knows (or will know) about the gifts. Not claiming them will red-flag your return, usually resulting in a letter asking for a correction, a delayed refund if you have one coming, and sometimes as much as an audit. If you are called on it, you will most likely be facing a penalty fine + interest. I kinda doubt anything more than that for the amounts we're talking about, but that's enough in my book to do what I need to do to pay what I owe. Times are tough for a lot of people, and while the IRS might be a little more patient and gracious than usual, I expect they'll eventually get what's coming to them.

At any rate, tax advice -- especially the type that would encourage you to NOT OBEY THE LAW -- should not be sought here and we will not allow the discussion of blatant tax fraud.

freeipodplayer

11-01-2009 18:43:54

[quote82bcdb3232="illnovah"]I have 3 gift taxes to file (2 from last year and 1 from this year).

What happens if I don't file them?

Family is going through a tough time right now and I was wondering if I could file them NEXT year..

Will I get audited??[/quote82bcdb3232]

One thing to not fuck with is taxes.

Didn't you have a job? If so... the money they took out was likely more than you will owe for the gifts...

illnovah

12-01-2009 14:26:33

[quote1330ca19d0="dmorris68"]Legally, you must claim them in the year they are reported. If you have been 1099ed then the IRS already knows (or will know) about the gifts. Not claiming them will red-flag your return, usually resulting in a letter asking for a correction, a delayed refund if you have one coming, and sometimes as much as an audit. If you are called on it, you will most likely be facing a penalty fine + interest. I kinda doubt anything more than that for the amounts we're talking about, but that's enough in my book to do what I need to do to pay what I owe. Times are tough for a lot of people, and while the IRS might be a little more patient and gracious than usual, I expect they'll eventually get what's coming to them.

At any rate, tax advice -- especially the type that would encourage you to NOT OBEY THE LAW -- should not be sought here and we will not allow the discussion of blatant tax fraud.[/quote1330ca19d0]

blatant tax fraud? c'mon now

thanks for the other info though

guelah75

12-01-2009 15:32:37

ask the IRS for an extension if you need more time to get everything on order

cubbieco

13-01-2009 09:15:19

Its Jan 12. You have until April 15th. An extension is a little premature. Besides when filing an extension you need to pay any taxes you owe by April 15th anyway or you will have penalties. There are many companies that you can use their software to file taxes electronically online for free (usually federal only). Start at IRS.gov click on freefile and go from there. Once you have your stuff together it will only take you a couple of hours (or much less). If its going to take you more than that, go to H&R Block and get it done.

If you actually owe money, you can file your taxes electronically early anyway and just send the check in by April 15th. Give you a couple of months to save and plan for it.

In all honestly you really don't want to mess with the IRS. If you "forget" to claim some of your 1099 income they will match it up with their computers and send you a nasty letter in a few months requesting the money with penalties.

ashilef

13-01-2009 11:54:33

When do 1099s start showing up? Is there a deadline for those just like W-2s? Also even if I haven't received a gift worth over 600 hundred (brandarama) am I still expected to pay taxes on it this year?

dmorris68

13-01-2009 14:43:38

[quotef129cca767="ashilef"]When do 1099s start showing up? Is there a deadline for those just like W-2s? Also even if I haven't received a gift worth over 600 hundred (brandarama) am I still expected to pay taxes on it this year?[/quotef129cca767]
They typically go out during the month of January according to IRS guidelines, but there is no [if129cca767]law[/if129cca767] saying you must have them by 1/31. Not receiving one is not an excuse to fail to claim it.

And yes, if you are legally required to file a return, then you are legally required to report ANY freebie gifts/income you earned during the claim year, no matter the amount, and no matter if you receive a 1099 for it or not. All the $600 threshold means is that they are required to get and retain a W9 for you and send you a 1099, if they intend to file the expense as a business deduction (which most any business will do, especially when it accounts for a significant portion of their expenses). So it's a threshold that determines their record-keeping practices, and has nothing to do with how you are supposed to file your taxes. You're expected to claim whatever you've earned regardless of the amount, even if it's $10.

viperklt21

13-01-2009 14:45:44

[quote5586abf30f="ashilef"]When do 1099s start showing up? Is there a deadline for those just like W-2s? Also even if I haven't received a gift worth over 600 hundred (brandarama) am I still expected to pay taxes on it this year?[/quote5586abf30f]

More then likely you should receive the 1099 by the end of Jan. For some reason though I think I remember reading that they HAVE to send them by the end of Feb. Someone else will probably clarify.

You are supposed to report all the money you receive from the freebie sites on your tax return. The $600.00 limit only applies to the freebie companies being forced to report it.

(sorry for another ans dmorris is quicker then I)

doylnea

13-01-2009 16:56:20

1099s must be post-marked by 1/31

dmorris68

13-01-2009 17:13:31

[quotef8980f61e9="doylnea"]1099s must be post-marked by 1/31[/quotef8980f61e9]
Is that an enforceable regulation/law or just IRS guidelines though? Because over the years I've seen lots of 1099's (and W2's for that matter) not even generated by then, even though that's supposedly the cutoff date, and I don't recall ever hearing of any sanctions for it.

ashilef

13-01-2009 18:50:26

Sorry guys I should have been more clear. I am EXPECTING a gift that is worth over 600 dollars, but have yet to see it, will I still see a 1099 for it?

doylnea

13-01-2009 18:57:18

I was wrong about the postmark date. Per the IRS guidance (PDF)[=http//www.irs.gov/pub/irs-pdf/i1099gi.pdf]Per the IRS guidance (PDF) (page 16) 1099-MISCs must be available to recipients (us) by January 31.

The penalties are as follows

[quote98f1af3679]Failure To File Correct Information Returns by the Due Date (Section 6721)

If you fail to file a correct information return by the due date and you cannot show reasonable cause, you may be subject to a penalty. The penalty applies if you fail to file timely, you fail to include all information required to be shown on a return, or you include incorrect information on a return. The penalty also applies if you file on paper when you were required to file electronically, you report an incorrect TIN or fail to report a TIN, or you fail to file paper forms that are machine readable. The amount of the penalty is based on when you file the correct information return.
The penalty is
$15 per information return if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $75,000 per year ($25,000 for small businesses, defined below).
$30 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $150,000 per year ($50,000 for small businesses).
$50 per information return if you file after August 1 or you do not file required information returns; maximum penalty $250,000 per year ($100,000 for small businesses).[/quote98f1af3679]

dubbin87

13-01-2009 20:38:00

[quoteba6552dc92="ashilef"]Sorry guys I should have been more clear. I am EXPECTING a gift that is worth over 600 dollars, but have yet to see it, will I still see a 1099 for it?[/quoteba6552dc92]

If you didn't recieve it in 2008 you won't have to pay taxes on it this year. Next year you will.

dmorris68

13-01-2009 20:47:16

[quote4f68a66b25="ashilef"]Sorry guys I should have been more clear. I am EXPECTING a gift that is worth over 600 dollars, but have yet to see it, will I still see a 1099 for it?[/quote4f68a66b25]
Not this year, since you did not receive the gift in 2008. Assuming you receive the payout this year (2009) you should get the 1099-MISC next year for filing your 2009 taxes.

EDIT beat me to it, that's what I get for starting a reply and then getting distracted.

mommyjamieof2

13-01-2009 21:21:51

How does this work if I receive a $600 gift does that reduce my refund $600?

ashilef

13-01-2009 22:36:36

Sounds good, thanks guys!

theysayjump

13-01-2009 23:10:31

[quote11801a21be="mommyjamieof2"]How does this work if I receive a $600 gift does that reduce my refund $600?[/quote11801a21be]

No it's based on different factors, like and such as, as how much money you made last year, how much you received in freebies and a whole shitload of other scenarios that only pertain to you that nobody on this forum could know.

A couple of years ago I made about $14k from my (full-time) job, I also received about $3,000 worth of "gifts" through various freebie sites, and I still got a refund of about $600. That doesn't mean you will though.

Ask whoever does your taxes for you, and if that's you, then pay a professional to do them for you if you're unsure.

dmorris68

14-01-2009 07:00:39

[quote37d60fb22a="mommyjamieof2"]How does this work if I receive a $600 gift does that reduce my refund $600?[/quote37d60fb22a]
No. As TSJ said, everyone's tax situation is different so nobody can tell you what impact it will have on your taxes.

The US tax system is based on tiered brackets. Since a lot of people don't seem to grasp how that system works, here's an overly simplified lesson, which also serves to illustrate just how many variables are involved and thus why you can't ask people on an internet forum about personal tax figures and expect any reliable answers. ;)

From Wikipedia[=http//en.wikipedia.org/wiki/Tax_bracket]Wikipedia

[quote37d60fb22a]For 2008, the Federal tax brackets for a single (unmarried) person are[1]

li 10% from $0 to $8,025
li 15% from $8,026 to $32,550
li 25% from $32,551 to $78,850
li 28% from $78,851 to $164,550
li 33% from $164,551 to $357,700
li 35% $357,701 and above

This applies only to amounts above $8,950 (assuming the standard deduction of $5,450 plus one personal exemption of $3,500) for an individual. For example, a single individual without children pays

li 0% of the first $8,950 of income,
li 10% of the income between $8,951 and $16,975,
li 15% of the income between $16,976 and $41,500,
li 25% of the income between $41,501 and $87,800,
li 28% of the income between $87,801 and $173,500,
li 33% of the income between $173,501 and $366,650, and
li 35% of the income exceeding $366,650.[/quote37d60fb22a]

So you can see that once you're above the $8,950 income floor, you start paying taxes based on your total taxable income, but you don't pay one percentage on the whole amount. It's broken up into chunks, with percentages applied to each chunk. If you're married filing joint, head-of-household, etc., then you will have a different set of numbers, but the same concepts apply.

So, to actually figure out your taxable income. Total up all of your income, including from wages, freebies, interest/dividends, etc. This may not include every dollar you earned, because some things like 401(k) & FSA contributions and employer medical plan premiums are typically pre-tax or tax exempt, and thus reduce your gross taxable wages. Then there are a couple of adjustments that a relatively few people can apply to this number before proceeding, but for simplicity lets just say your total income is your AGI (Adjusted Gross Income). Then from AGI you subtract your deductions, either your standard deduction(s) for you and any spouse or dependents, or your total itemized deductions (mortgage points/interest, charitable gifts, medical costs that exceed the floor percentage, lots of other things), whichever is greater. The total deduction is subtracted from your AGI to arrive at your taxable income.

Then referring to the tax brackets above, you chop up the income along those lines and apply the percentages to their relevant chunk of income. [i37d60fb22a]So nobody, no matter their income and highest tax bracket, pays a fixed percentage on their entire taxable income.[/i37d60fb22a] I find that this point is lost on a lot of people who never learned about how the tax system works. They hear "I'm in a 25% tax bracket" and assume they're going to pay 25% on all the income they earned. Not true. Even Bill Gates, applying the 2008 brackets above, pays just 10% of the amount between $8,951 and $16,975, same as you or I. Of course that's a tiny fraction of his total income, so the vast bulk of his taxable income [i37d60fb22a]would[/i37d60fb22a] be charged at the highest bracket.

This total tax amount is then offset by any credits you qualify for, such as Earned Income Credit, child tax credits, etc., to arrive at your net tax liability. If your total tax withholdings for the year (the amount you've paid in so far through payroll deduction or whatever) exceed this net tax liability, then you get a refund of the difference. If not, you have to pay the difference.

As I said, that's an [i37d60fb22a]over-simplified[/i37d60fb22a] explanation that leaves out a lot of detailed possibilities. For example, some other types of income, such as self-employment income, is subject to additional taxes that regular wage earners don't pay themselves. Then you have to factor in capital gains, estate taxes, and a whole slew of other vague and complicated tax laws and liabilities that apply to some but not others. Then of course come state and local income taxes, but only for some states and localities, and each have their own rules and brackets.

So you get the idea that while the same rules apply to pretty much everyone, your overall tax situation is unique to you and you alone -- it all depends on the totality of your tax situation, including income, deductions, credits, withholding amounts, state/local liabilities, etc. etc. This is why nobody can tell anyone how much they might be taxed on any gift amount. To even approximate is basically a wild guess, unless they've actually done your accounting for you.

doylnea

14-01-2009 08:39:52

I wonder if we shouldn't merge this thread with the previous year's threads?

Here are a smattering of threads, with more than a few posts in them.

http//forum.freeipodguide.com/viewtopic.php?t=73419
http//forum.freeipodguide.com/viewtopic.php?t=72263
http//forum.freeipodguide.com/viewtopic.php?t=69888
http//forum.freeipodguide.com/viewtopic.php?t=57857
http//forum.freeipodguide.com/viewtopic.php?t=48137
http//forum.freeipodguide.com/viewtopic.php?t=49536

I know that merging threads sometimes gets confusing because you can't tell what question is being answered. However, because it's the same questions and answers each year, having one giant tax thread may be useful

dmorris68

14-01-2009 09:47:41

Yeah, I've considered it too, and have been approached by a couple of members -- one just weeks ago who happens to be an accountant/tax-pro -- about having an official "tax thread." My reluctance has stemmed from our longstanding avoidance of appearing to offer tax advice, and the potential liabilities, no matter how unlikely, from doing so.

However as you point out, we get these same questions every year, and with member turnover there's a constant influx of people who are new to taxes or just never bothered to learn the basic principles. So perhaps an official sticky or FAQ thread is called for, where we can post general info and FAQs, bracketed by the standard disclaimers. At least it'll be easier to link people to one thread when they ask, rather than rehashing again and again. I'm okay with it if Admin and the other staff are...

cubbieco

14-01-2009 12:32:15

If you want specific answers you can always start your tax return even though you don't have the official forms yet. Start at IRS.gov, go through their free file program to a free online tax preparation software. Start going through your return just using estimates as you income and whatever and see what the software spits out. As long as you don't file your return you can make as many estimates as you want.

When you do get your actual W-2s, 1099s you've already started so just update the estimates with the actual info and you'll be done in no time.

Another option is here http//www.dinkytown.net/java/Tax1040.html . A quickie java tax calculator. Total up your income, enter if you are single, married, whatever, and your exemptions and wala, an estimated tax.

If you are living at home or are a college student and your parents are claiming you on their return you would put single, 0 for exemptions and your income. If your parents don't claim you then its 1 exemption.

Finally you mention a "refund" above but I want to clarify that for most people a refund only applies if you paid too much taxes already (exceptions for reasonably poor people with kids but I don't think that's you). If you've had little or no income withheld from your employer throughout the year then its not a matter of the $600 freebie income reducing your refund, but increasing the amount you must pay the IRS.

theysayjump

14-01-2009 12:53:27

[quote5ecdcc879f="dmorris68"]Yeah, I've considered it too, and have been approached by a couple of members -- one just weeks ago who happens to be an accountant/tax-pro -- about having an official "tax thread." My reluctance has stemmed from our longstanding avoidance of appearing to offer tax advice, and the potential liabilities, no matter how unlikely, from doing so.

However as you point out, we get these same questions every year, and with member turnover there's a constant influx of people who are new to taxes or just never bothered to learn the basic principles. So perhaps an official sticky or FAQ thread is called for, where we can post general info and FAQs, bracketed by the standard disclaimers. At least it'll be easier to link people to one thread when they ask, rather than rehashing again and again. I'm okay with it if Admin and the other staff are...[/quote5ecdcc879f]

We're already answering their questions so I don't see why having a dedicated official thread for it would hurt, or implicate us anymore than we have been doing already.

dmorris68

14-01-2009 14:32:40

[quoteadb631a0ab="theysayjump"][quoteadb631a0ab="dmorris68"]Yeah, I've considered it too, and have been approached by a couple of members -- one just weeks ago who happens to be an accountant/tax-pro -- about having an official "tax thread." My reluctance has stemmed from our longstanding avoidance of appearing to offer tax advice, and the potential liabilities, no matter how unlikely, from doing so.

However as you point out, we get these same questions every year, and with member turnover there's a constant influx of people who are new to taxes or just never bothered to learn the basic principles. So perhaps an official sticky or FAQ thread is called for, where we can post general info and FAQs, bracketed by the standard disclaimers. At least it'll be easier to link people to one thread when they ask, rather than rehashing again and again. I'm okay with it if Admin and the other staff are...[/quoteadb631a0ab]

We're already answering their questions so I don't see why having a dedicated official thread for it would hurt, or implicate us anymore than we have been doing already.[/quoteadb631a0ab]

Well, we have been pretty careful so far to answer only general questions, and couch our answers with the obligatory disclaimers. As long as we continue to do so, and are careful not to come off as a source of "official tax advice," then I don't see any increased liability from just centralizing that information. People are going to continue to ask, some of us are going to continue to answer, and it's just easier to paste a link and tell them "read here, but don't rely on it."

freeipodplayer

14-01-2009 21:46:05

same questions every year.

doylnea

15-01-2009 06:42:13

[quote048e6bd41b="freeipodplayer"]same questions every year.[/quote048e6bd41b]

and the same unhelpful inconsiderate comments from you. at least we're consistent around here.