Supporting Statements in TaxAct/Efile??

[TromboneAl]

Let's say you want to include a supporting statement with your tax return, something like this:

The amount on line 27 of form 5532 is blah blah blah because blah blah blah.
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How would you do that with TaxAct, assuming you plan to efile?

 

[OAG]

What is that form for?

 

[TromboneAl]

What is that form for?

Form 5532? I made that up just to give a general idea of what kind of statement I want to make. For a real example, here is a statement I'd like to make:

Concerning line 3 of form 8863 (Education Credits), although the $X in qualified tuition charges were billed in August and December of 2008, I paid the December bill in January of 2009. Thus I am including half of the amount on my 2008 return, and will include the other half on my 2009 return. So you mothers better remember that next year.
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[Bikerdude]

Form 5532? I made that up just to give a general idea of what kind of statement I want to make. For a real example, here is a statement I'd like to make:

Concerning line 3 of form 8863 (Education Credits), although the $X in qualified tuition charges were billed in August and December of 2008, I paid the December bill in January of 2009. Thus I am including half of the amount on my 2008 return, and will include the other half on my 2009 return. So you mothers better remember that next year.
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Don't bother. You can tell them in person at the audit.

 

[ERD50]

T-Al, isn't there just a little [-]audit-red-flag[/-] "note-pad" icon at the end of every entry in TaxAct? I'm not going to log in just to check, but that is what I recall. I'm pretty sure those notations are included when you efile - but check the TaxAct help to be certain.

-ERD50

 

[TromboneAl]

Yes, you can add "details" (line items and a comment) to any entry, but I've searched and not found any information about whether they are included with the efiled return -- I would guess "no" but I've sent an email to their tech support.

 

[TromboneAl]

Response from TaxAct:

Dear TaxACT(R) Customer:

At this time there is no way to attach a comment to an e-filed return. Any line item detail entered into the software is just for your usage and does not get submitted to the IRS.

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This really surprises me. Don't most people sometimes need to add some explanation of something on their return?

 

[harley]

Response from TaxAct:

Dear TaxACT(R) Customer:

At this time there is no way to attach a comment to an e-filed return. Any line item detail entered into the software is just for your usage and does not get submitted to the IRS.

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This really surprises me. Don't most people sometimes need to add some explanation of something on their return?

No way! I wouldn't do anything to cause a human being to look at my return. I want it to sail right through their computer system without a ripple. I figure if they can't answer the phone questions right a third of the time, getting them to read and interpret a comment correctly is a long shot.

 

[TromboneAl]

No way! I wouldn't do anything to cause a human being to look at my return. I want it to sail right through their computer system without a ripple. I figure if they can't answer the phone questions right a third of the time, getting them to read and interpret a comment correctly is a long shot.

I agree, but there are times when an explanation is needed.

OTOH, I remember my return from about 1989. My business had lost $20,000 that year because of an unsuccessful advertising campaign. So I wrote a supporting statement explaining why I lost so much money.

So, I was audited, and when I explained why I lost so much money, the audit was over (well, after they did some fishing expeditions). My conclusion was that they never read the supporting statement.

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Next year, I'm going to be asking for a tuition credit, but there will be no 1098T. So I feel that I'll need to say something.

 

[ERD50]

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Next year, I'm going to be asking for a tuition credit, but there will be no 1098T. So I feel that I'll need to say something.

Hmmm, maybe not. I don't have a link but I read recently that the IRS was doing a lot more "audits" by mail. If something does not add up, they request an explanation. If they get it, that's the end of it. According to the article, this is because their auditing budget was cut in the past few years, so they are (GASP!) trying to do things more efficiently then a one-on-one interview for each case.

Back in the late 80's I just made the stupid mistake of not mailing my Schedule A with the rest of the forms. I got a note saying all those deductions would be denied, and I would owe the taxes (forget if there was interest & penalties), if I could not provide documentation. I just sent in the Sched A, and that closed the case.

-ERD50

 

[dex]

From my audit training - not IRS - a statement as you prepare and attach has little value.
The auditor always wants to see the supporting document.

Also, unless you have always done the accrual method; you are on cash basis and it is the pay date that is used for the deduction - not the bill date. So it is proper for the Dec. bill; paid in '09 to be claimed in '09

"Concerning line 3 of form 8863 (Education Credits), although the $X in qualified tuition charges were billed in August and December of 2008, I paid the December bill in January of 2009. Thus I am including half of the amount on my 2008 return, and will include the other half on my 2009 return. So you mothers better remember that next year."

 

[TromboneAl]

That sounds reasonable, although any letter from the IRS isn't good for one's blood pressure. Looks like I'll go with no statement.

 

[FUEGO]

TAl, I always file my taxes the old fashioned way (1040 hard copy mailed in) and there have been notations in the columns and/or explanatory letters every year as far back as I can remember. Looks like I'll be filing the old fashioned way for a while longer...

I have never been audited because of those letters that I sent in or notations in the column. I have been audited for a few other things that were not my fault - erroneous reading of 1099's by IRS*, falsified forms an associate filed and listed me for something, etc. Although I have never done anything like counting an expense paid in 2009 on my 2008 tax forms.

I may this year though - I did epay from my checking acct for my real estate taxes Dec 30 or 31 2008 but my account wasn't debited till Jan 2. I'm calling that a 2008 expense since I entered it into my records and the control of the funds was gone in 2008. I may have to argue that point if I get audited though.

*that was scary receiving an audit letter saying I owed $35,000 in back taxes and penalties. Hey, they just ignored the decimal point on the 1099 so my pay looked 100x larger than it actually was!

 

[harley]

It will be interesting to see what happens next year when you make the deduction without the 1098T. I assume you'll put the note in with that return. I'd be willing to bet that if you do get a response from the Infernal Revenue Service it will turn out that no one read your comment. Keep us informed. And don't forget your IRS Pencil Sharpener.