Tax paper work question...

15 years ago

Hi Guys,

I hope someone here can help me!!

I am trying to help my mom and dad with their taxes...trouble is, I haven't done my own taxes for many many years (gladly pay someone)so I don't know all the facts anymore.

Anyways, my question is, do you still need to send copies of interest income statements, or are these automatically sent to the IRS? I ask because in the paper work my dad gave me, the only copies in there say that they are for the taxpayers records.

I hope I am making sense.

TIA

Rita

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Comments (6)

nodakgal
15 years ago
Are you talking about 1099 forms? IF so here is a link

Here is a link that might be useful: 1099 forms
cynic
15 years ago
You report it on the Interest/Divident form and keep the statements. The paying institution reports it to the IRS so they have it, as long as the Social Security number on file is correct. If it isn't on there or isn't correct, you need to send it to the institution and I believe you're required to advise the IRS on it.
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Greetings again Anne, How great it is that your aunt remembered you in her will. If there are taxes due relative to the estate, that'll be the business of the estate to take care of. When you receive money from an inheritance here, it is not taxable: I received thousands from my Dad's estate in the late '80s and I didn't have to pay a cent of tax on that income. When I invested some of it, it had become part of my assets and I had to declare the income that it produced, year by year, along with whatever other income I received. If you invest it wisely and it earns you $300. next year, you'll have to declare the income that it produces, $300. in the year that it's produced. Enjoy the addition to your income. If the income isn't to go on for many years, I have a suggestion which may be of interest. As it's more or less found money, unexpected, probably a good idea to spend one month's income from the estate in the first year and save and invest the second month's, when you haven't got really used to receiving it, yet. If you can afford it, continue that plan for another year or so. Then, for a time, spend two months' income and save and invest the third month's income. Then spend three months' worth, investing the fourth, for a year or so, as is convenient. If you can save 6 months' worth for a couple of years, then 4 months' for a couple of years, then 3 months' worth for a couple of years, followed by 2 months' worth for a couple of years if you can, and one month's worth for a couple of years ... after 10 years, you'd have saved $3,200.00, and if you could invest it at 8%, paying 2% in tax and allowing 2% for loss of value due to inflation, you'd have about $4,000. (more or less equivalent to today's dollars) in that investment account. If you chose to invest one or two of those monthly amounts per year as time went on, after while you'd have a substantial amount on hand. After several years, when the monthly bequest ceases, you'll have an asset that will produce some income to at least partially replace the bequest that isn't available any more. In the meantime, it's a nice addition to one's emergency fund, available when some unexpected expense comes along. In which case, one needs to make an earnest effort to replace the funds that were used for the emergency, if one feels that one may likely need that fund intact to produce an addition to ongoing income, later. Even if you expect the bequest to continue for many years, the plan that I've suggested may be a good idea, especially if you lack much of an emergency fund at present, for it's always useful to have some funds on hand to take care of an emergency without sweating blood when one comes up. Good wishes to you for the weeks ahead. ole joyful
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wanda_va
15 years ago
The easiest way is to e-file--then you don't have to send in any paperwork.

If their income isn't high, you can probably file for free - check irs.gov to see if they qualify.
ritamay91710
Original Author
15 years ago
Thanks guys. I just read in the margin of the 1099R to report this income, and send a copy if there was federal income tax withheld, which there wasn't so I am good there.(I think!! LOL!!)
And on the 1099-INT, it said that the information is being furnished to the IRS, so I guess they don't need that one either.

I'm glad I am done with that!! And their taxes were simple! God help me if they were complicated.

Thanks again
jemdandy
15 years ago
I use Turbo Tax and let it do all the hard stuff about deciding which forms to send in. About interest, if the financial instution sent only a report of items to report and no official forms, then enter the data on the appropriate form(s). The report tells you which boxes to enter various data. Carefully enter the data exactly as shown. The institution has already reported this data to the IRS. If your return is one of the randomly selected ones for initial screening, I suspect that an automatic comparison is made between your reported data and that reported by the institution. A difference may flag your return for further audit.

Consult the IRS booklet or website for proper forms and instructions. BEWARE: I am not a tax expert.

The forms that I used were:

1099-INT for interest
1099-DIV for dividends
1099-R for income taken from an IRA that was funded by pre-tax money.

If you dad is over 70.5 yrs old, and has an IRA that was funded with pre-taxed money, make sure that he is taking the Required Minimun Distrubution each year. The penality for under-drawing is hefty. However, due to the bad economy, the RMD was temporarily rescended for 2009 and one may take as little as desired.
joyfulguy
15 years ago
I have a suggestion.

When you pick up your own tax return from the preparer, ask whether that person knows about some ways to reduce one's tax owing, i.e., is s/he an accountant or financial planner. I so, would s/he have some suggestions about some ways that you could alter your system some in order to qualify for some tax reductions or deferrals? And what kind of a fee would s/he charge for a consultation.

After the busy tax season is over, take our tax return in (with paper for note-taking) and discuss some tax avoidance or deferral techniques that are available for a person in a situation like yours ... then give some thought as to whether you want to implement them.

Tax evasion gets you in trouble ... but tax avoidance should be practised by every taxpayer.

oloe joyful

Tax paper work question...

Comments (6)

nodakgal

cynic

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