Letter from IRS!

[catii]

One of my former neighbors was an IRS Regional Manager, & he had some simple advice: Be NICE!

The IRS agents are just doing their job, & have nothing personal against you, unless you give them a reason! That reason may be your return...or your attitude. So, smile a lot.

 

[BeachOrCity]

Repairs prior to renting get added to the basis, not expenses. That is what they want to know. The dates of the receipts vs. The rental dates.



There is a $25,000 loss limit against your income.

+1. I think the OP might have goofed on their return.

 

[JoeWras]

Wow, must be something about 2017. We got hit, as did friends of ours. Ours was a roller coaster ride....

Its 2017 audit season. Fortunately, it is about to come to a close.

The general pattern of audits is that they start the summer of the next year.

So for year 2017:
- File 2017 in April 2018.
- IRS focuses on immediate refunds in spring 2018.
- IRS computers kick out "dumb mistakes," i.e. pure math errors in early summer 2018 for 2017 returns. I once got a surprise refund because I miscalculated my estimated payments. Nice surprise, and quick! I think by law they have to especially find the refund errors else interest may be paid to the citizen?
- Summer through fall computers and people are working on the harder problems from previous years (and absorbing late or extended filings)
- Winter 2019 starts season of ingesting 2018 returns
- Summer and fall of 2019 is 2017's turn for the deeper problems

At least that's what I can ascertain from the letters me and my friends and family have received.

It doesn't mean you are safe for 2017 starting next year. It is just more unlikely.

This pattern even applied 35 years ago. Back then, the IRS was first getting banks to assign interest in each account to a social security number. I had an account at a bank that my parents banked at. I had about $200 in that account. My parents had about $200,000, all their life savings. Interest rates were pretty high back then.

Turns out some bank employee assigned all accounts named "Joe W." to my SS#. Dad and I are both Joes. I get all of Dad's interest.

Oh, that was a lot of fun to unwind. Fortunately, the IRS was really good about it once they got a medellion stamped letter from the bank VP. Before that, it was just: "here's your bill..."

And of course, since the bill come 18 months after tax is originally due, the interest on the bill alone gave me a heart attack.

P.S. After this, I'm sure they looked at Dad's form. He reported all that interest and paid. He never got a letter.

 

[dixonge]

I've always dreaded the potential of an audit, but never had one. My worst fears were surrounding years when I had complicated returns. The worst was when I did a lot of options. Even the automated software that was supposed to sort all that out created amess of forms. I compensated by leaving out some potential deductions just in case an audit may prove I had missed something that would cost me.

Now my returns are much simpler. No mortgage or medical expenses = standard deduction. Easy peasy.

 

[athena53]

The IRS had no basis for some stock sells, so assumed $0 basis.

I had this issue once- didn't include the basis for multiple money-fund redemptions. Frequently the scary amount owed can be reduced to zero or near zero with some additional information.

Another time I'd done a tax-free rollover of a 401(k) after I left my last employer. The form they supplied correctly coded it that way but the "taxable amount" box was left blank, so I dutifully entered it into TurboTax that way. The IRS computer decided the entire amount was taxable. Easily corrected with a polite letter.

Now I try to see what the alleged issue is before I panic.

 

[Letj]

The OP can deduct more than $25,000 in rental losses if OP is deemed a real estate professional which OP might be given 15 properties.

 

[tb001]

One of my former neighbors was an IRS Regional Manager, & he had some simple advice: Be NICE!

The IRS agents are just doing their job, & have nothing personal against you, unless you give them a reason! That reason may be your return...or your attitude. So, smile a lot.

I think this is so true. The woman who did our audit loved my DH by the time they were done. She told him he reminded her of her son.

It's a fine line to walk between giving only as much as they ask for and not being too overly helpful and being nice, but I agree it's beneficial.

 

[Chris7]

Received a letter from the CA Franchise Board. They didn't like aspects of my 2014 taxes. I had adjusted medical deductions and business expenses on the CA form that I didn't "need" to on the Fed form. Apparently that wasn't allowed. It was about $1000. I would have had to amend my 2014 Fed Taxes and potentially have those Red Flagged so I just paid it.



Good luck with your case.


cd :O)

 

[Dalmore]

A letter from the IRS came in and said that they thought that they OWED us $5100.

Proof that filing Income Tax returns is a scam to support an industry that does not need to exist. The IRS knows exactly how much you owe or are owed, and could easily send you a bill or a check every year. There is no need for everyone to spend hours of time doing meaningless paperwork and stressing over dumb mistakes.

 

[gwraigty]

The IRS knows exactly how much you owe or are owed, and could easily send you a bill or a check every year.

That may be true for the most basic of situations, but not all. Certain investments and their related activity throughout the year can complicate things. There are some areas on 1099s from brokerages that say (paraphrasing) that "This info has not been provided to the IRS, but may be useful in filing your tax returns." Some of the needed info is contained in those sections.

 

[pb4uski]

Proof that filing Income Tax returns is a scam to support an industry that does not need to exist. The IRS knows exactly how much you owe or are owed, and could easily send you a bill or a check every year. There is no need for everyone to spend hours of time doing meaningless paperwork and stressing over dumb mistakes.

Ignorance is bliss.

In many cases, the IRS does not know how much you owe or are owed.... they know a lot with the current level of income reporting... my taxes are simple enough that they know enough to know what I owe.

But for people with Schedule C or Schedule E income like in this thread they have no idea about business or real estate expenses incurred, so the above is a very ignorant comment that is just plain wrong.