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So bummed out today. I got a letter from the IRS saying we owe $2200 for 2011. I'm really dumb on tax stuff but from what I understand we made a reporting error. We had a job relocation to WA that year and before my husband started full-time at Microsoft, they hired him temporarily via some other small company. I guess we were supposed to get, and submit, a W-2 for this company too. That didn't happen. What I'm trying to understand is if we really owe the taxes or not? I assume that our taxes were pulled out, as they usually are, before we got the paycheck. I could be wrong too. Does this make sense to anyone? I'm really hoping that all we have to do is get a copy of that W-2 and that will be it.
Was he put on payroll for that small company or was he a contractor? Do you not even have a last paystub to go off of?
Does the $2200 include penalties and interest or are they saying that all taxes?
There is no way with what information you have posted for anyone to tell you whether or not you really owe the taxes. We don't know how many exemptions you list on W-4's, your deductions, etc. Even if taxes were pulled out of those paychecks, you might not have been having enough taken out and owe taxes.
If they had your husband listed as a contractor, then you should have gotten a 1099. If that's the case, the taxes are on you guys to pay - plus self employment tax.
Last edited by WhereTheSidewalkEnds; 03-10-2013 at 01:45 PM..
If you had income and "forgot" to report it, it is all on you. Ignorance, lack of a reporting document, or most any other excuses are not a valid defense.
The previous posters are correct.
I am amazed that you assume taxes of any kind were taken out. Find out for sure what is going on. Normally the letter from the IRS will specify exactly what the IRS received that has been left off the tax returrn. The letter will have the type of document (W-2, 1099, etc.), the dollar amount of income and any taxes withheld documented . There will be a new calculation of income tax based on your original return with the new income added. If you carefully read the letter all this information will be there.
Step 1, identify the source of the income info
Step 2, identify if it is your income
Step 3, if yes, review the calculation and determine if there are any other deductions applicable.
Step 4, if there are no other issues, do what the letter requests. If it is a signature (most likely), sign and return with as much payment as possible to limit penalty and interest. They will process and bill you for the rest.
If you had income and "forgot" to report it, it is all on you. Ignorance, lack of a reporting document, or most any other excuses are not a valid defense.
The previous posters are correct.
I am amazed that you assume taxes of any kind were taken out. Find out for sure what is going on. Normally the letter from the IRS will specify exactly what the IRS received that has been left off the tax returrn. The letter will have the type of document (W-2, 1099, etc.), the dollar amount of income and any taxes withheld documented . There will be a new calculation of income tax based on your original return with the new income added. If you carefully read the letter all this information will be there.
Step 1, identify the source of the income info
Step 2, identify if it is your income
Step 3, if yes, review the calculation and determine if there are any other deductions applicable.
Step 4, if there are no other issues, do what the letter requests. If it is a signature (most likely), sign and return with as much payment as possible to limit penalty and interest. They will process and bill you for the rest.
Surprised? Absolutely. Defensive? No.
In our case, this is sheer ignorance.
You have to understand the context of our situation. I'm a stay-at-home mom. My employment history is limited and for all the companies I had worked for, yes, they did the subtractions. I believed that generally, those who need to really stress about their taxes are those that make a considerable income or are self-employed. My husband is not American and until last year, didn't make a significant income and also never experienced any "creative" employment situations. What do I mean by creative? I think he was technically a contracted employee for Microsoft working for a company called Populus from which he also got benefits. As I've stated my ignorance, I assume that if you a contractor, you are all on your own for benefits and taxes... not this weird hybrid thing with Populus.
Still, I am little surprised, give that my husband has earned a PhD and sometimes handles multimillion dollar projects that he didn't know, or forgot, or just mishandled, this Populus piece to our taxes. Oh well, all of life is a learning process... I'm confident, whatever the situation ends up being, we'll be mindful in the future.
I'm not defensive (that's actually an offensive suggestion). I'm angry because I do the budgeting and I work REALLY hard to keep all our accounts neat and tidy and this just screws up my numbers from here til the end of the month. I was expecting to go shopping and put extra money away for a Disney trip... something "fun".... but nope, I have to send it to the IRS... I'm just disappointed
Was he put on payroll for that small company or was he a contractor? Do you not even have a last paystub to go off of?
Does the $2200 include penalties and interest or are they saying that all taxes?
There is no way with what information you have posted for anyone to tell you whether or not you really owe the taxes. We don't know how many exemptions you list on W-4's, your deductions, etc. Even if taxes were pulled out of those paychecks, you might not have been having enough taken out and owe taxes.
If they had your husband listed as a contractor, then you should have gotten a 1099. If that's the case, the taxes are on you guys to pay - plus self employment tax.
Taxes = 2,911, Payments = 761 and Interest = 60
It doesn't say anything about penalties. I am honestly unsure about how he was employed.. it was temporary as he was still on contract for a professorship. Obviously, we'll be making some phone calls on Monday and probably marching back to HR Block too.
If he got benefits through Populus, sounds like he was an EMPLOYEE of theirs, not an independent contract (at least I've never heard of an IC getting benefits through a company -- I think that might even be one of the ways it's determined whether they are an IC or an employee). You should have received a tax form from Populus. Did you not get that? Or did you just forget to include it?
If he was an employee, taxes normally would have been withheld too, so your situation is really puzzling.
H&R Block can only go by what you gave them. If you didn't get them any form from Populus, they could not know to include it.
If he got benefits through Populus, sounds like he was an EMPLOYEE of theirs, not an independent contract (at least I've never heard of an IC getting benefits through a company -- I think that might even be one of the ways it's determined whether they are an IC or an employee). You should have received a tax form from Populus. Did you not get that? Or did you just forget to include it?
If he was an employee, taxes normally would have been withheld too, so your situation is really puzzling.
H&R Block can only go by what you gave them. If you didn't get them any form from Populus, they could not know to include it.
Good luck!!
I'm sure we'll get it figured out tomorrow. From what I can tell he was an employee of Populus (that's to be determined). If that's the case, I'm confident that taxes were withheld and we didn't receive or submit the W-2 to H&R Block (which I don't fault anyone except ourselves for not securing it). In fact when I asked my husband about it he was like, "I only worked for them for two months, and really, it was working for Microsoft, so how can I be expected to remember them 7 months later at tax time?" Well, now he knows what happens if he doesn't.
There is a W-2 that we forgot.
Still don't quite understand if we owe the (tax or penalty) money or not.
If the deductions were done right... the TAX owed should be a wash or close to it.
Not reporting still leaves you open to penalties.
Get fresh copies of the 1040 & instructions for 2011 (and the state returns too).
Fill in the blanks with your revised data.
See where you are and go from there.
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Well, now he knows what happens if he doesn't.
