Welcome to the MacNN Forums.

If this is your first visit, be sure to check out the FAQ by clicking the link above. You may have to register before you can post: click the register link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below.

You are here: MacNN Forums > Community > MacNN Lounge > Taxes: I got audited

Taxes: I got audited
Thread Tools
BRussell
Addicted to MacNN
Join Date: Mar 2001
Location: The Rockies
Status: Offline
Reply With Quote
Jul 24, 2006, 04:18 PM
 
And I deserved it.

In 2004, I made a large withdrawal from a mutual fund savings account to pay for a bunch of home improvement and landscaping stuff. Well, I didn't declare that mutual fund sale on my taxes that year. The rules for figuring how much tax you pay on mutual fund withdrawals are confusing and not easy if you do your taxes online with turbotax like I do, with different methods like FIFO and average cost basis. So rather than try to figure it out, I just didn't do it.

So when I get the "notice" (they apparently don't call them audits anymore), they said I owed them over $3000, plus interest. They had just treated every last bit of that withdrawal as capital gains, and want to tax me on all of it. In reality, with the stock market doing so crappy over the period in question, only a small portion of that would really have been capital gains. Most of it would have been just my own money from my paycheck that I deposited in this fund. My guess is that I might have really paid a few hundred dollars and been done with it.

So I guess I got what's coming to me. At this point I have to go to the trouble of challenging the notice so I can pay the real, much smaller amount that I should have paid to begin with, rather than the several thousand dollars they want.

Ugh. Any advice?
     
itai195
Addicted to MacNN
Join Date: May 2001
Location: Cupertino, CA
Status: Offline
Reply With Quote
Jul 24, 2006, 04:21 PM
 
When they find missing data from a tax return, the IRS tends to 'fill in the blanks' in the way most favorable to itself. Just one of those nice favors those good folks at the IRS are willing to do for us citizens. I'd consult a tax advisor since you don't seem to want to deal with the hassle yourself (can't blame you, personally).
     
waxcrash
Mac Elite
Join Date: Aug 2002
Location: Chicago, IL
Status: Offline
Reply With Quote
Jul 24, 2006, 04:27 PM
 
You bear the burden of proof. If your financial records are accurate and complete, then you shouldn't have a problem proving you owe less.
     
dillerX
Professional Poster
Join Date: Mar 2001
Location: Pit Slab #35
Status: Offline
Reply With Quote
Jul 24, 2006, 04:43 PM
 
Hire a tax attorney, not a tax advisor.

A good tax attorney will talk to the IRS for you, and handle all of the arguing back and forth through faxes and letters.

DO NOT talk directly to the IRS on this issue without being told to do so by your attorney.

This isn't cheap, but it is a mistake that caught up to you, don't make another one by trying to handle this yourself, or on the cheap.
I tried to sig-spam the forums.
ADVANTAGE Motorsports Marketing, Inc. • speedXdesign, Inc.
     
BRussell  (op)
Addicted to MacNN
Join Date: Mar 2001
Location: The Rockies
Status: Offline
Reply With Quote
Jul 24, 2006, 05:03 PM
 
So I've been pissing around with this stuff all morning, and from what I can figure out, I don't owe anything at all. My first fund purchases were in the late 1990s, when the stock market was going gangbusters, and the price was around $15 per share. When I sold them in 2004 they were at $14.50. So I actually had a capital loss on it, in which case, they probably owe me money.

Here's the fund.
     
   
Thread Tools
 
Forum Links
Forum Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Top
Privacy Policy
All times are GMT -4. The time now is 06:38 AM.
All contents of these forums © 1995-2017 MacNN. All rights reserved.
Branding + Design: www.gesamtbild.com
vBulletin v.3.8.8 © 2000-2017, Jelsoft Enterprises Ltd.,