Taxpayer asks:
I was told by “somebody” that the stimulus checks we received will be deducted from our tax refunds for 2008? Is that true?
Taxgirl says:
Nope. The tax rebates are not taxable and will not be credited against your 2008 return – unlike the 2001 rebates which were credited against the 2002 returns. There was some initial confusion about this – even CNN reported it differently, but that has since been cleared up.
I haven’t seen the 2008 returns yet but my understanding is that you will report the amount received on your individual tax return. This is ostensibly to make sure that everyone got their fair share (insert throat clearing here). The IRS says that the 2008 tax instructions will “include a worksheet to help those who did not qualify for a payment or those who received a reduced amount determine if they can obtain a benefit when they file their 2008 tax returns next year.” My cynical take on it is that the IRS wants to make sure that everyone files – again.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl!
Taxpayer asks:
Hi Kelly,
I have a quick question.I used e file ( turbo tax- free editon ) and IRS rejected it on 15th , so I sent my documents via postal mail.Meanwhile on my second attempt to e file with paper sign . IRS accepted my return. Does it create any problem as everywhere it says do not file ( on papers ) if you are e filing.
Please help me here.
Taxgirl says:
Hmm… I’ve never had this happen before. I have had clients that filed twice on paper because they weren’t sure that they had mailed it already (don’t snicker, it happens).
I am not sure what would happen with the case of efile and paper returns but here’s my hunch: assuming that the returns are the same, the IRS will ignore the second one. You’ll probably get a letter saying that there’s a problem with your return (because they IRS only has so many form letters and headings) and it will go on to say that they have received two copies of your return and that only one can be processed.
I’d hold tight and see. I definitely wouldn’t lose any sleep over it unless the returns are different, you sent payment with both or something similar. If any of those situations is the case, I’d follow up with IRS.
If anyone else has experience with this situation, by all means, chime in!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl!
Taxpayer asks:
Hi Kelly!
I’m so glad to have found your site – what a great service for all of us! My question is in regards to the 1099-MISC form. I am a small business owner and received a 1099 form for a December 2007 sale however the company did not pay until January 2008. Do I report that as income for 2007 (even though I did not receive any funds until 2008?).
Thanks so much for your help – going to be checking out your site all the time now!!
Taxgirl says:
Thanks for the nice words, I’m glad that you enjoy my site.
As to your question, it’s tricky.
You should only report income actually received (or constructively received) in 2007 on your 2007 form 1040. It’s tricky because I’m guessing the company that issued the 1099-MISC wanted to take advantage of the deduction in 2007. If they actually paid you in 2008, however, the 1099-MISC is just plain wrong.
My advice to you depends on two things – how much the payment is and what kind of relationship you want to have with the company that issued the payment.
If the amount is small enough, I’d let it go and report it on the 2007 return. This way, everybody’s happy.
However, if it’s a significant amount, you’d want to take advantage of the tax deferral. I would contact the company that issued the 1099-MISC and, in the nicest way possible, ask them to issued a correct 1099-MISC.
If the payer will issue a new one, problem solved. If the payer refuses, then you should notify the IRS. Call 1-800-829-1040. Have your name, address, Social Security Number, and payment information and the name, address, and phone number of the payer handy when you call.
An alternative that I’ve heard bandied about when this happens is just to file anyway as you believe to be true. The problem with filing with the old 1099-MISC but not reporting until 2008 would be that the IRS will not have the correct information and will assume that you failed to report income in 2007. That, to me, just creates more problems than it solves.
I hope that helps. Thanks for reading!
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl!
Taxpayer asks:
Hi,
I have a question, I’m hoping you can help me resolve my issue.
My husband recieved a 1099 Misc form as his only source of income, but we have be told that he has to file as self-employed been he has to file a Schedule C form, but our conflict is that it is not his dump truck and he does not generate any expenses being he is only an employee.
I hope you can help me resolve my doubts.
Taxgirl says:
Hmm. Obviously, without knowing more specifics, I can’t tell whether your husband is being properly classified or not. But I will say this: it sure sounds like he’s more of an employee than an independent contractor. And here’s why…
The IRS broadly defines an independent contractor as one who has “the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result.”
So red flag #1 for me is that you state that your husband does not own the tools that he uses for his job (the dump truck belongs, I’m assuming to the person that pays your husband).
Red flag #2 for me is that you state that your husband has no expenses associated with the job. Most independent contractors have expenses as they provide their own equipment. The IRS considers expenses a factor in classification of workers as independent contractors, querying the extent to which the worker has unreimbursed business expenses; the extent of the worker’s investment in the facilities used in performing services; and the extent to which the worker can realize a profit or incur a loss.
Other factors would include whether your husband makes himself available to other potential businesses (I’m guessing no since he doesn’t own the truck) and what kind of benefits and expenses, if any, are paid by the hiring business.
I would suggest that you contact a tax professional to discuss your circumstances and make sure that you’re being classified properly.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
Have a question? Ask the taxgirl!
