Taxpayer asks:

Dear TaxGirl,

Recently I received a request from a company to fill out a W-9 form.  I am not, nor have I ever been, an employee of this company.  However, I did receive money from them.  I’ll explain quickly…

My mother worked as a 1099 employee for a manufacturing company.  She sold millions of dollars of their product to different companies, and in turn that manufacturing company would then send her commissions.  Unfortunately my mother passed away last year and as a result of her unexpected passing I, being her next of kin, was responsible for paying her funeral expenses.  Because my mother had worked for this company for so many years, and was very close with the owners of the company, the CEO and CFO both felt that it would be the right thing to do to pay me a set amount of her commissions.  They wrote me a check out of the company account and I accepted it thinking it was a gift.  I am now being asked to complete a W-9 form.  Since this was a “gift” am I required to fill out this form?  And am I required to list this amount as income and therefor be taxed on it?

I’m not sure if it will help you, but the amount was $5000.00.

I appreciate any help you can provide me with this situation.  I was always taught to never look a gift horse in the mouth, but now I guess I should first ask if there are tax implications!  Ha!

taxgirl says:

So this is a tough situation. Unfortunately for you, the IRS doesn’t consider payments made by an employer to an employee (or for the benefit of an employee) to be a gift. With that in mind, the CEO and CFO should have been more clear about the nature of the payments. However, it sounds as if they intended to settle with you for commissions owed to your mother, which means they’re going to report it as if it were taxable compensation.

Regarding the form W-9, they should have asked you to complete the form prior to issuing the check. However, if the form is required and you fail to complete it – whether the company asked you when they should have or not – you could be subject to a penalty from IRS (as will the company, but that’s their issue). Alternately, the company could issue the 1099 with the taxpayer ID marked as “REFUSED” which could raise eyebrows at IRS. I rarely find that it’s worth it to refuse to complete the form W-9 if you know they’re planning on issuing a 1099.

All of that said, I don’t know if this was properly payable to you in the first place from a tax perspective. There might be some complicating factors here such as the commissions being more properly payable to the estate (which it might have been if this was actually a settlement for money owed to your mother). You should contact your tax pro and/or estate attorney if you have questions or concerns about taxes owed on the payment.

One last thing… That bit about always asking first if there are tax implications before accepting gifts, compensation or money from third parties? Excellent advice. Promise me that you will in the future.

–

And let’s make sure we understand a few things, ok?

1. Unless you have a representation letter in hand, you and I don’t have an attorney-client relationship, capiche? I mean, I’m sure you’re a nice person. I appreciate you stopping by the blog. But it doesn’t mean anything more (I’m having a weird deja vu to a couple of bad dates in college).
2. Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. This blog isn’t meant to offer you legal advice. I’m just calling it like it is. If you have real questions – i.e. you’re hiding in a closet while the feds bang on your door – you need to consult with a tax professional. If you live in my corner of the world, that might be me. But see #1.
3. I do work at a law firm. Some might even say I’m a partner at said law firm. But this blog is in no way affiliated with my law firm. The other partner and my malpractice carrier insist on it. And I have to live with one of them. And it’s not my malpractice carrier. So, again see #1.
4. I’m not responsible for anything anybody says on this blog except me. But play nice. I don’t want to have to throw you out of here (there’s that deja vu to college again).
5. And one more thing. I’m not here to help you cheat the system. That should be obvious. But just in case it’s not, the IRS wants me to reiterate that I’m not. So consider this your Circular 230 Notice:

IRS Circular 230 notice: In order to comply with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog.

It will also fail to make you rich, lose weight, get white teeth or regrow hair that has been lost. I can’t guarantee dates or life matches (in fact, it’s arguable that if your friends find out that you read a tax blog, you could lose points). I have never made a good stock tip and I can’t buy your gold. I’m also miserable at making pie.

If you still have a question, check out these tips before you “ask the taxgirl.”

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Ask the taxgirl: “Temporary” Employees and 1099s
• Ask the taxgirl: Self-employment Tax
• Ask the taxgirl: Getting Paid Under the Table
• Ask the taxgirl: Making Work Pay Credit for 2011
• Ask the taxgirl: Paying someone else’s health care expenses

Taxpayer asks:

Hi,
I just got my taxes done and I don’t see paperwork for my homestead credit or working pay credit in my taxes. I looked at last years and all of it is in that one I called and left a message with the person who did my taxes but I should get working pay credit if I own a home plus I am one dependent. Ishould get working pay credit to this year correct?

taxgirl says:

There is no Making Work Pay Credit for 2011 so you’re not going to see the paperwork (Schedule M) for that credit.

Homestead credits are not federal tax credits. I’m assuming that you’re referring to a state or local credit of some description. I can’t answer that one for you but would suggest that you follow up with your preparer if you have any questions or concerns.

Your question raises a really good point, however: it’s extremely important to review your return with your preparer. When you sign that return (or authorize e-file), you’re doing so under penalty of perjury. You need to understand what it is that you’re signing: willful ignorance isn’t an excuse. Ask your preparer to walk you through what your return says, including any accompanying schedules or additional forms or reports. If you’ve paid for state or local returns, make sure that they’re included with your paperwork and that the proper schedules are included. If you need vouchers or extra copies, make sure that you have those in hand, along with any special filing or mailing instructions.

If you’ve left without paperwork that you’ve paid for, you should definitely call up your preparer and find out what happened. It may be something as simple as having accidentally left them on a table.

Finally, be sure that you use a preparer that you trust to know the rules and to follow-up, if needed.

–

And let’s make sure we understand a few things, ok?

1. Unless you have a representation letter in hand, you and I don’t have an attorney-client relationship, capiche? I mean, I’m sure you’re a nice person. I appreciate you stopping by the blog. But it doesn’t mean anything more (I’m having a weird deja vu to a couple of bad dates in college).
2. Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. This blog isn’t meant to offer you legal advice. I’m just calling it like it is. If you have real questions – i.e. you’re hiding in a closet while the feds bang on your door – you need to consult with a tax professional. If you live in my corner of the world, that might be me. But see #1.
3. I do work at a law firm. Some might even say I’m a partner at said law firm. But this blog is in no way affiliated with my law firm. The other partner and my malpractice carrier insist on it. And I have to live with one of them. And it’s not my malpractice carrier. So, again see #1.
4. I’m not responsible for anything anybody says on this blog except me. But play nice. I don’t want to have to throw you out of here (there’s that deja vu to college again).
5. And one more thing. I’m not here to help you cheat the system. That should be obvious. But just in case it’s not, the IRS wants me to reiterate that I’m not. So consider this your Circular 230 Notice:

IRS Circular 230 notice: In order to comply with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog.

It will also fail to make you rich, lose weight, get white teeth or regrow hair that has been lost. I can’t guarantee dates or life matches (in fact, it’s arguable that if your friends find out that you read a tax blog, you could lose points). I have never made a good stock tip and I can’t buy your gold. I’m also miserable at making pie.

If you still have a question, check out these tips before you “ask the taxgirl.”

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Ask the taxgirl: Making Work Pay Credit for 2011
• Ask the taxgirl: Worker’s Comp
• Ask the taxgirl: Self-employment Tax
• Ask the taxgirl: Getting Married When a Tax Liability Exists
• Ask the taxgirl: First Time Filer

Our first tax trivia question is:

In 1913, Congress levied a one percent tax on net personal incomes above $3,000, with a six percent surtax on incomes above $500,000. As the nation sought greater revenue to finance the World War I effort, the top rate of the income tax rose considerably. What was the top income tax rate during World War I?

For more about the giveaway, including rules and prizes, check out this post.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Ask the taxgirl: I Forgot Schedule M
• Richard Hatch Released from Prison (Again)
• Snakes in a Tax Office
• Ask the taxgirl LIVE
• Ask the taxgirl: Self-employment Tax

Taxpayer asks:

I received workers comp most of the year, will I receive a 1099 for these earnings?

taxgirl says:

Amounts you receive as workers’ compensation for an occupational sickness or injury are not taxable if they are paid under a workers’ compensation act or a statute in the nature of a workers’ compensation act; this also applies to your survivors.

There are some exceptions to this rule. The most common exception is that the benefits do not escape taxation if they are retirement plan benefits you receive based on your age, length of service, or prior contributions to the plan, even if you retired due to disability. Additionally, if part of your benefits reduces the amount that you receive from Social Security (or Railroad Retirement Benefits), that part is considered part of your SS or RRB benefits and may be taxable.

Worker’s compensation can be tricky. In some cases, if you are out of work short term, you will be allowed to return to work in a different capacity. If you return to work after qualifying for workers’ compensation, and are re-assigned to a job performing light duties, your wages are taxable just as before.

–

And let’s make sure we understand a few things, ok?

1. Unless you have a representation letter in hand, you and I don’t have an attorney-client relationship, capiche? I mean, I’m sure you’re a nice person. I appreciate you stopping by the blog. But it doesn’t mean anything more (I’m having a weird deja vu to a couple of bad dates in college).
2. Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. This blog isn’t meant to offer you legal advice. I’m just calling it like it is. If you have real questions – i.e. you’re hiding in a closet while the feds bang on your door – you need to consult with a tax professional. If you live in my corner of the world, that might be me. But see #1.
3. I do work at a law firm. Some might even say I’m a partner at said law firm. But this blog is in no way affiliated with my law firm. The other partner and my malpractice carrier insist on it. And I have to live with one of them. And it’s not my malpractice carrier. So, again see #1.
4. I’m not responsible for anything anybody says on this blog except me. But play nice. I don’t want to have to throw you out of here (there’s that deja vu to college again).
5. And one more thing. I’m not here to help you cheat the system. That should be obvious. But just in case it’s not, the IRS wants me to reiterate that I’m not. So consider this your Circular 230 Notice:

IRS Circular 230 notice: In order to comply with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog.

It will also fail to make you rich, lose weight, get white teeth or regrow hair that has been lost. I can’t guarantee dates or life matches (in fact, it’s arguable that if your friends find out that you read a tax blog, you could lose points). I have never made a good stock tip and I can’t buy your gold. I’m also miserable at making pie.

If you still have a question, check out these tips before you “ask the taxgirl.”

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Ask the taxgirl: Incomplete Paperwork
• Ask the taxgirl: Looking a Gift Horse in the Mouth
• Ask the taxgirl: Making Work Pay Credit for 2011
• Ask the taxgirl: Self-employment Tax
• Ask the taxgirl: Voluntary Child Support

Taxpayer asks:

I forgot to include the Schedule M with my free e-file.
Should I do an amended return or ?
Thank you.

taxgirl says:

Nope. There’s no need to amend because… there is no Schedule M for individual taxpayers for the 2011 tax year. The Schedule M was used to figure the Making Work Pay Credit but for the 2011 tax year, there is no Making Work Pay Credit; it has been replaced with the payroll tax “holiday.”

And because I can’t help myself, I’m just going to say it: this is why I hate the transitional nature of our Tax Code. Congress has literally no idea of how confused taxpayers are each time that they change the rules like this. It’s maddening. It’s expensive. And it needs to stop.

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Making Work Pay Credit: The Basics
• Ask the taxgirl: Making Work Pay Credit & Tax Years
• 9 Things to Know About the Making Work Pay Credit and Payroll Tax Cuts
• Ask the taxgirl: I forgot to file Schedule M!
• Ask the taxgirl: I Don’t Qualify for the Making Work Pay Credit

Taxpayer asks:

If my w2′s for the year are still at single but I am married can I file single or should I file married. Is it true that if my w2′s are at single they are pulling more money and if I file married I’m not getting back what I should?
It never dawned on me that I needed to change my w-2′s

Thank you for your help.

taxgirl says:

Easy answer first: you file for the tax year based on your marital status as of the last day of the year. It makes no difference what appears on your payroll forms.

You’re right, though, to note that your marital status may affect your withholding. Your form W-2 reports withholding (as well as wages and benefits) for the tax year. The amount withheld is calculated using information which you provide on a form W-4 (downloads as a pdf).

The point of the form W-4 is to figure out how many allowances to claim for purposes of your federal income tax withholding. The general rule is that the more allowances you claim, the less withholding you’ll have taken out of your paycheck. If you claim zero, you’ll have the maximum amount taken out. If you claim a large number, you’ll have less taken out. If you do it right, you won’t owe or be owed: the absolute best scenario from a tax planning standpoint is to have your tax liability (or refund) at the end of the year be as close to zero as possible.

If you’re married, you generally add “1″ when figuring your allowances:

In addition, you usually add one allowance for each dependent. There are some exceptions to these general rules. You can make adjustments to your allowances for any number of reasons, including having dual wage earners in one family, if you claim certain kinds of credits  or if you plan to itemize your deductions. If you’re not having enough withheld (meaning you owe too much at tax time), you can adjust the number of allowances down (meaning you’ll claim fewer allowances). If you’re having too much withheld (meaning that you tend to get a large refund), you can adjust the number of allowances up (meaning that you’ll claim more allowances).

If you’re not sure what to claim, ask your tax professional or give the IRS withholding calculator a whirl. You’ll need to have the following info handy:

1. Marital status for the tax year
2. Number of dependents claimed on your return during the tax year
3. Info about child care expenses paid during the year
4. Amount of wages earned during the year and amounts withheld (including frequency of pay – best to have a recent pay stub handy)
5. Specifics about your itemized deductions, if you itemize

If you plug in all of the info, the calculator will estimate your anticipated tax (or refund) due for 2012, as well as recommendations for increasing or decreasing your allowances.

If you think you need to change your allowances, you’ll want to contact your HR folks or payroll department at your workplace.

Most taxpayers don’t have to update their forms W-4 very often. I suggest running the numbers every other year unless circumstances warrant more often. If any of the following happens to you, consider an update:

• You receive a large refund and expect the same for the next tax year;
• You owe a significant amount to IRS and expect the same for the next tax year;
• You get married or divorced;
• You have a baby, adopt a child or lose a child;
• Your child or children go away to college or move away from home;
• You buy or sale a home;
• You retire;
• You inherit a significant amount of money;
• You cash in stock options;
• You file for bankruptcy; or
• You change jobs.

This list is by no means exhaustive but should be a good start. If you’re not sure, it never hurts to ask your tax professional or check the withholding calculator.

Hopefully, that helps… and congratulations on your new marriage!

–

And let’s make sure we understand a few things, ok?

1. Unless you have a representation letter in hand, you and I don’t have an attorney-client relationship, capiche? I mean, I’m sure you’re a nice person. I appreciate you stopping by the blog. But it doesn’t mean anything more (I’m having a weird deja vu to a couple of bad dates in college).
2. Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. This blog isn’t meant to offer you legal advice. I’m just calling it like it is. If you have real questions – i.e. you’re hiding in a closet while the feds bang on your door – you need to consult with a tax professional. If you live in my corner of the world, that might be me. But see #1.
3. I do work at a law firm. Some might even say I’m a partner at said law firm. But this blog is in no way affiliated with my law firm. The other partner and my malpractice carrier insist on it. And I have to live with one of them. And it’s not my malpractice carrier. So, again see #1.
4. I’m not responsible for anything anybody says on this blog except me. But play nice. I don’t want to have to throw you out of here (there’s that deja vu to college again).
5. And one more thing. I’m not here to help you cheat the system. That should be obvious. But just in case it’s not, the IRS wants me to reiterate that I’m not. So consider this your Circular 230 Notice:

IRS Circular 230 notice: In order to comply with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog.

It will also fail to make you rich, lose weight, get white teeth or regrow hair that has been lost. I can’t guarantee dates or life matches (in fact, it’s arguable that if your friends find out that you read a tax blog, you could lose points). I have never made a good stock tip and I can’t buy your gold. I’m also miserable at making pie.

If you still have a question, check out these tips before you “ask the taxgirl.”

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Taxes from A to Z: W is for W-4
• Ask the taxgirl: Do I Have To Take The Making Work Pay Credit?
• Ask the taxgirl: Form W-4
• Ask the Taxgirl: Withholding
• Making Sense of the Making Work Pay Credit (2011)

I had a great time on Friday with our “Ask the taxgirl LIVE” segment. I know there wasn’t a lot of notice about it and yes, I heard about it (thanks for your emails and messages).

This was my first time live blogging on Forbes and we had some technical pieces to work out. That said, it went off without a hitch which means that I will definitely do it again. Keep an eye out for future versions. The plan is to focus on certain topics for a couple (i.e. a small biz session, an itemized filer session) and still have a general session or two, as well. I promise to make sure that there’s plenty of notice so that you can participate.

Of course, sorting through emails means that I’m finally sitting down to open up the Sunday Mailbag. Today, I’m tackling most of your tax pro-related questions – with some quick site-related queries and my obligatory sports question, of course.

Taxpayer asks:

I found your site when I was looking for information about rals. I lost my money last year without anyone telling me why and I want to report it. Who do I report it to?

taxgirl says

If I understand you correctly, you believe that part or all of your refund was withheld inappropriately as a result of using a RAL (refund anticipation loan). If that’s the case, there are probably a couple of things you should do before you report it:

(1) Call IRS and find out why your refund was less than anticipated. You might have over-estimated what you thought you’d receive and they can give you the actual numbers for comparison.

(2) Call the Treasury Offset Program Call Center at 1.800.304.3107 if you believe your refund might have been subject to an offset for back taxes, unpaid student loans or child support arrears. They can’t point you in the right direction to find out what the offset might be (they can’t give you the amount but can tell you who to call).

If, after that, you still believe that your refund was mishandled, you can make a complaint to the company in charge of processing your refund/RAL. That’s a good first step. If they won’t do anything to help resolve your issue, consider contacting the Better Business Bureau. You can also check with the agency responsible for overseeing/licensing the preparer. Finally, if you believe the behavior to be criminal, you might want to check in with the Attorney General in your state to see whether there’s an investigation pending for that company/preparer.

But do me a favor, okay? Make sure you check things out on your end first before you file complaints or contact state agencies. I agree that unscrupulous tax preparers need to be stopped. On the chance, however, that there’s a mistake here (either your mistake or an innocent mistake by the preparer), keep in mind that this is the tax preparer’s livelihood. Some of these investigations and accusations have serious consequences to the preparer so you want to be sure that you’re right before you act. Don’t screw up somebody’s life over a misunderstanding.

Taxpayer asks:

Why don’t you have a Google+ button on your site?

taxgirl says:

I’ve been asked this a lot. The short version is that, on Forbes, I don’t control the tech side of things. Share buttons aren’t something I can automatically add as a plugin because they have to be compatible with the rest of the site. But I will ask the powers that be if there’s enough interest.

Along those lines, I’ve also been asked if I’m on Google+. Yes I am. You can find me here. Or just search for me (Kelly Phillips Erb) on Google+. If you want to add me, be sure and tell me that you know me through the blog so that I can pop you into the taxgirl circle. But be forewarned that I don’t hang out on Google+ much at all since I’m not a fan. You have a better chance of catching me on Facebook or Twitter.

Taxpayer asks:

Either the accountant whom filed my taxes or the IRS person in charge printed another persons social security number instead of mine. The person whom the mistaken social security number belongs to owes the IRS a large amount.

The accountant blames the IRS people and has not yet made the correction after 16 months.

What course of action should I take and whom do you think is responsible for this mistake

taxgirl says:

I can’t say who is responsible for the mistake since I don’t know the actual details. However, it is important that you try and fix this mistake as quickly as possible.

If this simply is a transposition/numbers error and your accountant hasn’t been able to move this issue forward in nearly a year and a half, perhaps it’s time to contact someone else. This is the kind of work that tax attorneys who deal in compliance issues handle. It should be a matter of potentially amending your return to reflect the proper number and getting your record cleared/refund issued (or whatever relief you’re seeking).

Taxpayer asks: I’m a tax attorney like you. I don’t prepare many tax returns but around April, I will do a few as a favor to clients. Do I need a PTIN?

taxgirl answers:Gah. Preparing a few returns every year on your own rather than referring them to an accountant sounds like more trouble than it’s worth but I know that’s not what you’re asking. The quick answer to your question is yes. As of January 1, 2011, (last year) all paid preparers must have a Preparer Tax Identification Number (PTIN) before preparing returns; you can find out how to get one here. Attorneys are subject to annual registration, including a fee, but are exempt from the exam and the continuing ed credits since we already had to pass the bar and do CLEs every year. If you want to see the requirements for various preparers, IRS has a nice little chart.

Taxpayer asks: I live in the suburbs near Philadelphia (Delaware County). Can you recommend a local preparer?

taxgirl answers: I have a few folks in Philadelphia and the near suburbs that I’ve worked with and tend to recommend. You can drop me a note (kelly.erb@taxgirl.com) and I’m happy to share those names.

I do know some folks across the country (and am happy to share those names when I can) but I would suggest that you ask your friends and neighbors for recommendations since they’ll have more information that I do. Click here for a few other tips for choosing a preparer.

Taxpayer asks:

Hi taxgirl, I am a huge fan of yours. Do you ever do anything outside of the blog like go on TV or the radio? Do you write anywhere else? Inquiring minds want to know.

taxgirl says:

Thanks for the kind words! This time of year, I appear on TV and radio quite a bit. In the past, I’ve been on local shows like NY1 and Good Day Philadelphia, as well as lots of radio appearances across the country from The Big Dumb Fun Show to Minnesota Public Radio and CBS Market Watch. I try to give my readers a heads up when I know in advance when the pieces will appear – so check back often!

Taxpayer asks:

This Giants fan wants to know: How ’bout them Eagles?

taxgirl says:

Like I didn’t see this one coming… I can’t be responsible for Andy Reid’s play calling. All I can do is take solace in the fact that catchers and pitchers report in 27 days (12 hours and 34 minutes as of this writing, but who’s counting?).

–

One more thing before I go: there’s a lot of cool stuff on tap for tax season so be sure to watch the blog, as well as look for updates on twitter and Facebook. I’ll be announcing some great giveaways (there’s one starting next week), tax trivia and tax haiku (one of my favorite bits).

–

Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Tax Scams Still Rampant
• Sunday Mailbag: The Tax Refund Edition
• Ask the taxgirl: IRS Rebate Help
• My Best Tax Advice Ever, Part III: Make Friends With a Tax Pro
• Ask the taxgirl: Rebates and Foreign Jobs

Tax season has started which means two things:

1, You have questions; and

2, The IRS is only going to answer 70% of them.

So I’m going to take a stab at answering some of your questions LIVE. We’ll give it a whirl via CoverItLive on the blog on January 20, 2012, at 1:00 pm. But this isn’t a no holds barred tax free for all. There are some ground rules. I am, after all, an attorney.

• Keep your personally identifiable information out of your question. You can’t take it back once it’s out there on the interwebs. So use a little common sense.
• I’ll answer as many questions as I can in the space of an hour. Don’t resend the same question and don’t get annoyed if I don’t answer.
• I live in Philly and I can barely make out our crazy tax laws. With that in mind, I won’t answer your state and local questions, sorry.
• This is meant to be a quick answer, to get you thinking or looking in the right direction. It is not a substitute for consulting with a competent tax professional, i.e., if you’re being audited, if there are IRS collections agents on your doorstep, if you are considering fleeing to Namibia to avoid criminal charges, don’t ask me what I think, contact your tax professional. That’s like bleeding profusely from a severed limb and writing into to the folks at Web MD to see what they think – they’re going to tell you to see a freakin’ doctor!
• If you’re looking for representation, this isn’t the place to ask me. If you want to find out more about my practice, you can check out my web page. Otherwise, there’s no attorney-client thing going on here. If you don’t have a representation letter from me, I don’t represent you. Capiche?
• Believe it or not, I didn’t grow up under a rock. I’ve been at this blogging thing for a bit. So if you think you’re being clever by sending your advertisement/promotion/tax treatise/election propaganda wrapped up in the guise of a question, you’re not. You’re just annoying. And rude.
• And speaking of rude, don’t be. Not just because well, it’s rude, but because my mother could be reading and she already worries about me and she’s having a heart procedure next week (I’m not making this up). She doesn’t need any more stress and neither do I.
• And because the IRS has lots and lots of rules about this stuff, here’s my IRS Circular 230 notice: In order to comply with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this web site is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this document. So there.

I reserve the right to add more caveats – that’s what lawyers do. For more info about asking questions – or to find out how to ask a question through more traditional means (“the email” as Mom would say) – check out this prior post.

Of course, this isn’t just for taxpayers. I’m hoping my colleagues will chime in, too. See you all back here:

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• How Do I “ask the taxgirl”?
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With just a few days to go before the IRS starts accept e-filed returns, my inbox is chock full of ask the taxgirl® emails. Here are some things to remember:

1. I get a lot of emails and I read every single one. I’m not ignoring you but you’re also not the only email I’ll get today. So please be patient.
2. I consider a lot of factors when I choose a question to post. If I notice a similar bunch of questions (for example, about how the Making Work Pay Credit affects your taxes this year), I’ll try to answer those first. I also think about the timeliness: if something is making headlines now or affects your filing, I’m likely to post that before a more general question.
3. Your question may be too broad or too specific. I do get questions like “Should I file Married Filing Jointly or Married Filing Separately?” without another word. In contrast, I’ve gotten questions that include absolutely every detail, down to a diary of phone calls to IRS and names of dependents. Fill me in on the details and state your question plainly without giving me too much information. I don’t need your shoe size or your mother’s maiden name. And hey, I’m a chatty girl. I get that you might fear that you’re leaving something out but don’t worry – if it’s just a little piece of info and I think I’ll need it, I’ll ask you. I don’t redact your question before I post it (except for the email address) so don’t post anything that you wouldn’t want your mother – or mine – to see.
4. Don’t send a note asking for favors: I won’t call the IRS and find out where your rebate checks are, why your refunds isn’t what you expected or why your return wasn’t accepted as filed. Notwithstanding that I can’t do those things anyway without a Power of Attorney which authorizes me to, I’m not your tax attorney unless you have a representation letter from me. So please don’t ask. And don’t send me your personal information like your Social Security number out of the blue. Honestly, I’m a good person – just ask my mother. But you shouldn’t take such risks with anyone you don’t know. It’s scary.
5. I rarely answer specific state or local tax questions. I just can’t. As much as I’d love to help – and I would – I just don’t know the specific property tax laws in Petaluma or the sales tax rules in Peoria.
6. I have a spam filter. I have to. Mostly because of, well, you know, evil spammers. My spam filter will almost always dump your email into spam if your email doesn’t have a subject. Try including a word or two in the subject to tell me what your question is about, like “mortgage interest question” or “I don’t have my 1099″ – it will help make sure that the emails end up where they need to be. Make sure that you send it to the right address (askthetaxgirl@taxgirl.com), too. You can also post on Facebook or via twitter but remember that your information – including your name and question – will be visible to others.
7. I am almost always happy to help out a fellow journalist with a piece or give an interview about a tax story. If you’re looking to seek me out for a story, don’t contact me through the askthetaxgirl email. Choose one of these options instead and be sure to give me a quick idea of what you’re looking for and whether you have any applicable deadlines. If you’re a reader and you just want to say hi, try following me on twitter or like my page on Facebook – you’ll probably hear from me sooner.
8. If you’re actually sitting in an audit or jail, I can’t stress enough how much you need to put down the computer and find yourself a good tax professional right now. Run, do not walk, to the phones and call someone to help you.
9. I love answering your questions. I really do. It’s why I do it. But I’m a lawyer, not a miracle worker. I’m also not a marriage counsellor, doctor or investment advisor. So ask accordingly.

And one more thing:

Since you can never have enough disclaimers…

And there are a bunch of cheats out there – or at least the IRS thinks so…

And I need to sleep at night…

IRS Circular 230 notice: In order to comply with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog.

It will also fail to make you rich, lose weight, get white teeth or regrow hair that has been lost. I can’t guarantee dates or life matches (in fact, it’s arguable that if your friends find out that you read a tax blog, you could lose points). I have never made a good stock tip and I can’t buy your gold. I’m also miserable at making pie.

With all of that in mind, ask away! And keep an eye out for my Ask the taxgirl® LIVE segment coming up in the next couple of weeks. Also on tap? A couple of cool videos that I’ve made (okay, I admit that cool is relative), fun giveaways and a form 1040 primer. Because paying taxes is painful… but reading about them shouldn’t be.

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Ask the taxgirl: Why Didn’t You…?
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• Looking for Something?

Taxpayer asks:

I was wrongfully fired off of assumptions. It’s a small family owned business. They used to pay me under the table. What are the steps/where do I turn to, to have them caught red handed for paying under the table?

taxgirl says:

This is one of those questions that is difficult to answer in a few paragraphs but I’m going to give it a go. For the sake of simplicity, I’m going to restrict my answer to the tax-related implications and not address any of the employment related or other legal questions – that’s a whole other can of worms for which you may want to seek legal counsel.

First, it’s important to understand what “under the table” means. The implication is that you were being paid out of pocket and not documented. That may be true. It may also be true that your employer was classifying you as an independent contractor. Simply not having taxes withheld (even if you think they should have been) does not mean that you are being paid “under the table.” If you were, in fact, properly classified as an independent contractor – and not an employee – the employer would not have been required to withhold taxes.

Nonetheless, the employer should have clearly indicated to you the terms of your employment, including how you would be classified and paid. You should have also been asked to complete a federal form W-4 (for an employee) or a federal form W-9 (for an independent contractor).

If you believe that you have been misclassified as an independent contractor, you can report it to the IRS using a form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (downloads as a pdf). The IRS will review the facts and circumstances and contact the employer for his or her side before officially determining your status. If it turns out that the IRS agrees with you, it doesn’t exempt you from your own personal tax obligations.

If you didn’t complete any forms and it was clear that your employer really was paying you “under the table” or what we call “off the books” (meaning no record of your existence for tax or employment purposes), that’s different. In most cases, there’s no real incentive to completely pay workers off the books unless there’s something else going on, such as the employee not having the authority to work in this country or an attempt to avoid credit obligations such as student loans or alimony. But still, it happens.

Your employer never should have offered to pay you off the books and I’m not giving him or her a pass. But the problem in this context, from a tax perspective, is that by accepting an agreement to be paid off the books, you’ve caused yourself some agita in the process. You’re definitely not paying in to Social [entity display="Security" type="section" active="true" key="/security"]Security[/entity] or Medicare which affects your ability to collect in the future. You likely haven’t been reporting on your side to the IRS or the state (that’s the point of getting paid off the books, right?) so depending on how long this has been going on, you have some catch-up to do that will likely be expensive.

There may also be a difference in terms of how much money you actually received versus what your employer claims to have paid you. Again, if it’s off the books, the issue of proof is a big one. Make sure that you have excellent records.

So what should you do? That’s a personal choice. There are options if you were mistreated or misclassified. But if this really is just sour grapes because you accepted a deal that didn’t work out like you hoped, you don’t get a break for turning someone else in. My advice in many of these cases is to settle up on taxes on your end and move on. Yes, you can report your employer but I’m not really sure what that gets you, other than a bit of Schadenfreude.

Bottom line: don’t accept an offer to pay you off the books. Your employer isn’t doing you any favors and these arrangements almost always end in disaster. If and when this finally catches up with your employer, he or she won’t hesitate to throw you under the bus in much the same way you’re contemplating now.

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And let’s make sure we understand a few things, ok?

1. Unless you have a representation letter in hand, you and I don’t have an attorney-client relationship, capiche? I mean, I’m sure you’re a nice person. I appreciate you stopping by the blog. But it doesn’t mean anything more (I’m having a weird deja vu to a couple of bad dates in college).
2. Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. This blog isn’t meant to offer you legal advice. I’m just calling it like it is. If you have real questions – i.e. you’re hiding in a closet while the feds bang on your door – you need to consult with a tax professional. If you live in my corner of the world, that might be me. But see #1.
3. I do work at a law firm. Some might even say I’m a partner at said law firm. But this blog is in no way affiliated with my law firm. The other partner and my malpractice carrier insist on it. And I have to live with one of them. And it’s not my malpractice carrier. So, again see #1.
4. I’m not responsible for anything anybody says on this blog except me. But play nice. I don’t want to have to throw you out of here (there’s that deja vu to college again).
5. And one more thing. I’m not here to help you cheat the system. That should be obvious. But just in case it’s not, the IRS wants me to reiterate that I’m not. So consider this your Circular 230 Notice:

In order to comply with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog.

It will also fail to make you rich, lose weight, get white teeth or regrow hair that has been lost. I can’t guarantee dates or life matches (in fact, it’s arguable that if your friends find out that you read a tax blog, you could lose points – but I’m not telling!). I have never made a good stock tip (that I’m aware of) and I can’t buy your gold.

If after all of that, you still have a question, check out my “ask the taxgirl” policy here.

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Want more taxgirl goodness? Sign up to receive posts by email, follow me on twitter (@taxgirl) or hang out with me on Facebook.Similar Posts:

• Ask the taxgirl: “Temporary” Employees and 1099s
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