Author Topic: IRS is after me  (Read 7833 times)

Megatron

  • Stubble
  • **
  • Posts: 130
IRS is after me
« on: August 27, 2013, 12:39:56 PM »
I forgot to file taxes for a few stocks that I sold in 2010 and now I got a letter from the IRS saying I owe a few hundred bucks with Proposed changes to my 2011 form 1040. I didn't cash out, I just bought some other stocks with the money in the brokerage account. I was just starting out so I didn't know much and didn't realize I had to report the sale. So would I have to do a 1040 amendment or something? Does anyone have experience in this? It looks like the IRS saw it as profit. didn't take into account the gain/loss of the equities.
I like to add that I've been paying taxes on all equity transactions since. I just forgot I made those trades in 2010.
« Last Edit: August 27, 2013, 12:41:33 PM by Megatron »

matchewed

  • Magnum Stache
  • ******
  • Posts: 4381
  • Location: CT
Re: IRS is after me
« Reply #1 on: August 27, 2013, 12:42:51 PM »
I would just contact them directly to find the best resolution. The IRS will be able to answer on whether you need to amend one of your 1040's.

Spork

  • Walrus Stache
  • *******
  • Posts: 5748
    • Spork In The Eye
Re: IRS is after me
« Reply #2 on: August 27, 2013, 12:47:01 PM »
Whatever you do: don't screw with them.  Don't lie to them.  Get it taken care of promptly even if it means paying more.  They are not a force to be reckoned with. 

I've had to amend taxes once -- due to a financial institution sending me an updated copy of somethingorother after I had already filed.  If you use Turbotax (or similar) it has an option to file an amended return.  That's how I did it.

mpbaker22

  • Handlebar Stache
  • *****
  • Posts: 1095
Re: IRS is after me
« Reply #3 on: August 27, 2013, 01:09:44 PM »
I second the contacting the IRS directly.  Explain the situation.  Should get taken care of.

Particularly if you're dealing with a small amount of money (few hundred bucks) they don't want to spend a lot of time on a little money.

If you're publicly Republican the whole thing changes though. ;)  I jest.

Numbers Man

  • Guest
Re: IRS is after me
« Reply #4 on: August 27, 2013, 01:42:57 PM »
If you're comfortable with calling the IRS (or have a tax pro call them) then call them and reference their letter that they sent to you. Explain that you mistakenly didn't record your stock sales. Confirm with the IRS that you should file a 1040x (amended return). File the 1040x either through a tax pro, use tax software or do it yourself. A 1040x is really not hard to prepare. Also, you'll have to file an amended return with your state, because the IRS is going to snitch.

footenote

  • Pencil Stache
  • ****
  • Posts: 801
  • MMMing in MN
Re: IRS is after me
« Reply #5 on: August 27, 2013, 01:49:25 PM »
+1 on calling the IRS. This is a simple and small issue; they will be happy to help you do what you need to do.

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5209
Re: IRS is after me
« Reply #6 on: August 27, 2013, 01:53:25 PM »
I your shoes I would amend the return and send it in with a check for the extra tax.  They will assess a penalty and mail the bill to you.  Call the number on the form letter and tell them you are doing this, that it was a mistake you made because it was the first time you had filed after the sale of a stock. 

When you call the IRS, your call could end up anywhere in the country and more than half the time you will not get much help from the person you talk to.  Ask the person to note that you have filed an amended return and sent in the additional tax due on the file.

Megatron

  • Stubble
  • **
  • Posts: 130
Re: IRS is after me
« Reply #7 on: August 27, 2013, 02:17:50 PM »
Thanks for the advice, gang.
I called IRS but the call volume is too high and the robot asked me to call back another day. I will goto H&R block to talk to someone today and try again tomorrow.
thanks again.



madage

  • Bristles
  • ***
  • Posts: 405
  • Location: TX
Re: IRS is after me
« Reply #8 on: August 27, 2013, 02:30:18 PM »
I will goto H&R block to talk to someone today and try again tomorrow.

Not a "tax pro" as recommended here, but I suppose if someone there prepared the 2010 return it's not a bad place to start. Definitely run away if they try to charge you. Filing a 1040X is not difficult.

tomsang

  • Handlebar Stache
  • *****
  • Posts: 1085
Re: IRS is after me
« Reply #9 on: August 27, 2013, 03:15:16 PM »
Review your return line by line to determine if there are any other items that you are missing.  Lots of time you can find additional itemized deductions, additional sales of securities that were sold at a loss, basis for the securities, student loan interest, etc.  Make sure you have already captured everything that you can to reduce your taxes. 

The IRS is not after you,:)  Their computer shows a matching problem, where what your broker recorded as proceeds did not show up on your tax returns.  I would be very doubtful if I human has actually seen your file as this is strictly a matching issue.

Have fun finding additional tax benefits.  Maybe you can get a refund.  If not the interest and penalties are not too bad.  So no major damage.

Good luck!

Tom

AlmostIndependent

  • Pencil Stache
  • ****
  • Posts: 521
  • Age: 39
  • Location: Anchorage, AK
Re: IRS is after me
« Reply #10 on: August 28, 2013, 11:30:39 AM »
The IRS really isn't that bad. I got audited a couple years ago and other than being a massive pain in the ass paperwork drill it wasn't bad. Contact them and see what they are proposing as a solution. If it seems reasonable then go with it. If not contact a tax pro and see what they say.

Spork

  • Walrus Stache
  • *******
  • Posts: 5748
    • Spork In The Eye
Re: IRS is after me
« Reply #11 on: August 28, 2013, 12:41:59 PM »
The IRS really isn't that bad. I got audited a couple years ago and other than being a massive pain in the ass paperwork drill it wasn't bad. Contact them and see what they are proposing as a solution. If it seems reasonable then go with it. If not contact a tax pro and see what they say.

They're not as long as everyone's working with each other.   The moment you have a disagreement, all hell breaks loose.  I've personally not had this happen, but have had it happen to a couple of friends.  (And I have no idea if they deserved the treatment they got or not.)  They tend to seize assets first, ask questions later. 

oldtoyota

  • Magnum Stache
  • ******
  • Posts: 3171
Re: IRS is after me
« Reply #12 on: August 28, 2013, 12:47:27 PM »
Did you prep your taxes in 2010? If you had an account prepare them, they can probably help you with the IRS.

I third and fourth calling the IRS to take care of this quickly. If you have any trouble, contact your congressman and get them to help you deal with the IRS.

mpbaker22

  • Handlebar Stache
  • *****
  • Posts: 1095
Re: IRS is after me
« Reply #13 on: August 28, 2013, 01:13:12 PM »
To add to what Maigahane said, I did not record the cost basis of all my stocks.  I no longer have access to purchase history for 3 or 4 stocks I bought back in 2009/2010.  I did have access to monthly statements from my broker.

What I found out in this situations is I could show a time period during which I purchased those stocks.  Say, you can prove you bought a stock during January of 2010, the IRS allows you to use the lowest price of that stock during January of 2010 (only the lowest price during that time period).  While this might increase your tax bill over your actual cost basis, it's better than setting cost basis equal to 0 and paying taxes on the entire gross proceeds.

Megatron

  • Stubble
  • **
  • Posts: 130
Re: IRS is after me
« Reply #14 on: September 03, 2013, 09:15:22 AM »
Still couldn't get through to the IRS. but I did talked to someone at H&R block over the phone. I explained the situation and they said I need to do an amendment and and then a schedule D to report the stocks I sold that year. Unfortunately It was the first year I started buying into stocks outside of the 401k and Roth IRA so I didn't know I was suppose to report that.

Just an FYI for someone that might be going through the same thing.

thanks for the advice.

tomsang

  • Handlebar Stache
  • *****
  • Posts: 1085
Re: IRS is after me
« Reply #15 on: September 03, 2013, 09:41:29 AM »
Just an add on to what others have said, it is perfectly acceptable to estimate cost basis if you do not have the exact amounts.  The IRS can challenge your position, but if it is reasonable, based on other factual information, etc. then that should work.  Most likely, this is a computer generated notice and if you file an amendment with the estimate of cost basis, then the issue will be resolved.  If you do the best at complying with the law, you will be fine.  Don't pay more tax, because you are afraid.  Pay based what the true gain was.  If you don't know exactly take a conservative approach, but it is better than paying the gain at 100%.

Good luck!

Liquor Store Jesus

  • 5 O'Clock Shadow
  • *
  • Posts: 3
  • Location: PG County MD
Re: IRS is after me
« Reply #16 on: September 09, 2013, 09:32:05 AM »
A similar situation for me, I just did not file tax returns for 3 years.
So at the beginning of August I filed all of them State and Federal, 6 in total.
I mailed them off paid as much as I could figure I owed, so far all the checks have cleared and 4 of them have been finished, 3 with bills for additional penalties and interest, and 1 with a small refund.
I've found the IRS hotline is unhelpful, 6 times out of 7 the robot told me to call another day.
The local IRS service center was so full of people I would wasted the whole day there.
Moral of the story file send the check, the revenuers will be in touch if you owe more money, but you'll have your penalties and interest under control.