Merry Christmas from the IRS!

[GlockSpock]

Received a letter from the IRS yesterday. It's a Merry Christmas! I owe an additional $600 for 2011's taxes. Basically (from what I understand), I did a bit of trading on E*Trade, and it wasn't accounted for. However, when I filed my taxes at a local bookkeeper, he essentially said that unless it was a certain amount that I shouldn't worry about it. Well now I get a sheet listing all the (few) sales I made, and their amounts. It is essentially setup to look like all that money was income. However, I argue that the income is the difference between the total of what I paid and the total of what it sold for. Is this not the way the IRS sees it? Does the IRS see it as additional income for what you sell a stock for?

[Guest sL1k]

you are correct you are only taxed on the profit made from selling the stock.

[greenego]

The IRS only looks at what you sold it for, not what you realized from the sale. Just go back to who did the taxes and have them completed the forms required (SCH. D & Form 8949) and send it to the IRS. 

 

Merry Christmas

[bourne]

Hmmm. I got the same letter yesterday saying I owe $513. Happy Christmas!

[vontar]

Dam I hope I don't get a Merry Christmas Letter from the IRS.

[Verne]

Got it also.  WiIl drop it off at the CPA and let them hash thru it.

[Guest 6.8 AR]

That is one letter I am glad I didn't get. I quit playing stocks a few years ago.

[Guest CigarGuy]

Shoot. If you sold 'em at a loss, they may owe you money!

[Mike.357]

glad I am poor after reading this. 

[Sidinman]

glad I am poor after reading this. 

lol Mike, ah........I, I resemble that remark.

[GlockSpock]

I thought that they only taxed the net profit. With the appropriate documents and forms, should it be possible to get the amount that I owe down some?

[Xtarheel]

I had the same type deal from IRS last year. I forgot to include some capital gains on my 2010 taxes. They sent me a bill for near $25k, which was more than the total worth of the account ever was. Not sure how they came up with that number.  I should have owed about $600. I sent the appropriate form, Schedule D, and a copy of my account that showed the capital gains. It took several months to hear back, but they reduced it to about $800 which included interest and penalties.

[GlockSpock]

I have not yet calculated the exact number, but I estimate probably a total net gain of $800. I only played around with them a bit and then quickly realized that it was much to stressful for me so I sold them and haven't messed with them for nearly a year. I plan on later this week consulting with the CPA that did it last year and seeing what can go on. Hopefully the amount owed can be brought down. If not, oh well.

[Spiffy]

I wouldn't touch a stock with a 10 foot pole..........I seen what happened to Martha Stewart!

[1morethan8]

Well now, you gott'a know how to play the game!

 

You want to play stocks? The best way is through a Transitional IRA, or Roth IRA.

 

You don't pay tax until you withdraw money from the account and then at a "income" level...

after 59 1/2 you won't pay an early 10 percent tax penalty.

 

If you need some money, you borrow from the account... and pay yourself back.

[Guest CigarGuy]

I have not yet calculated the exact number, but I estimate probably a total net gain of $800. I only played around with them a bit and then quickly realized that it was much to stressful for me so I sold them and haven't messed with them for nearly a year. I plan on later this week consulting with the CPA that did it last year and seeing what can go on. Hopefully the amount owed can be brought down. If not, oh well.

 

 

Max cap gain rate is 15%.  So, your $800 gain will cost you $120.  Don't forget to add any transaction costs into the "cost", too.

[GlockSpock]

I overestimated the total gains. Total tax owed ended up being $38. I threw in an extra $.76 in order to cover 3% for 10 months (they were charging me $12 interest for the initial amount owed. 

[Guest CigarGuy]

I overestimated the total gains. Total tax owed ended up being $38. I threw in an extra $.76 in order to cover 3% for 10 months (they were charging me $12 interest for the initial amount owed. 

That sounds more like investment interest expense, which goes on Schedule A, but think you'll skate on that.........;)

[GlockSpock]

No, the 76 cents was for the interest on what I owed them from April to December. The original "bill" for ~$600 had an added expense of $12 to cover the 3% interest that accrued since I was owing the IRS money. Since instead of owing them the ~$600 for those months I owed them $38 for those months, the interest accrued was 76 cents.

[Guest CigarGuy]

Ohhhhhhh.  Interest owed the IRS on the "underpayment".  I misunderstood and thought it was a margin loan.

Nevermind!