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Posted by Dick Adams on April 4, 2007, 2:20 pm
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In 2006, I got a lump sum 'catch-up' payment ($45K). Since
I am a cash-basis taxpayer, my presumption is that this is
all taxable in 2006. The CPA who has prepared my returns
for the last ten years is of the same opinion. I believe
the professional expression for this is "It sucks".
Is there any nuance in the IRC that would allow me to amend
2004 and 2005 with some most of this money?
Dick
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Posted by Phil Marti on April 5, 2007, 2:08 am
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> In 2006, I got a lump sum 'catch-up' payment ($45K). Since
> I am a cash-basis taxpayer, my presumption is that this is
> all taxable in 2006. The CPA who has prepared my returns
> for the last ten years is of the same opinion. I believe
> the professional expression for this is "It sucks".
>
> Is there any nuance in the IRC that would allow me to amend
> 2004 and 2005 with some most of this money?
See page 10 of Publication 915. You can't amend, but you
may be able to reduce the tax effect.
--
Phil Marti
Clarksburg, MD
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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Posted by A.G. Kalman on April 5, 2007, 2:08 am
Please log in for more thread options Dick Adams wrote:
> In 2006, I got a lump sum 'catch-up' payment ($45K). Since
> I am a cash-basis taxpayer, my presumption is that this is
> all taxable in 2006. The CPA who has prepared my returns
> for the last ten years is of the same opinion. I believe
> the professional expression for this is "It sucks".
>
> Is there any nuance in the IRC that would allow me to amend
> 2004 and 2005 with some most of this money?
You can't amend but you can go back in time and recalculate
each year's tax bill and then use the calculation that has
the lowest tax. See IRS Pub 915 on Page 10 "Lump-Sum
Election."
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by brownie on April 5, 2007, 2:08 am
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> In 2006, I got a lump sum 'catch-up' payment ($45K). Since
> I am a cash-basis taxpayer, my presumption is that this is
> all taxable in 2006. The CPA who has prepared my returns
> for the last ten years is of the same opinion. I believe
> the professional expression for this is "It sucks".
>
> Is there any nuance in the IRC that would allow me to amend
> 2004 and 2005 with some most of this money?
See attached from the IRS website FAQ
6.1 Social Security Income: Back Payments
I received social security benefits this year that were back
pay for prior years. Do I refile my returns for prior years?
Are the back benefits paid in this year for past years
taxable for this year?
You must include the taxable part of a lump-sum
(retroactive) payment of benefits received in the current
year in your current year's income, even if the payment
includes benefits for an earlier year.
Generally, you use your current year's income to figure the
taxable part of the total benefits received in the current
year. However, you may be able to figure the taxable part of
a lump-sum payment for an earlier year separately, using
your income for the earlier year. You can elect this method
if it lowers the taxable portion of your benefits. Refer to
Publication 915, Social Security and Equivalent Railroad
Retirement Benefits, for a detailed explanation of the
election and worksheets.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Harlan Lunsford on April 5, 2007, 2:08 am
Please log in for more thread options Dick Adams wrote:
> In 2006, I got a lump sum 'catch-up' payment ($45K). Since
> I am a cash-basis taxpayer, my presumption is that this is
> all taxable in 2006. The CPA who has prepared my returns
> for the last ten years is of the same opinion. I believe
> the professional expression for this is "It sucks".
>
> Is there any nuance in the IRC that would allow me to amend
> 2004 and 2005 with some most of this money?
Well you sure came to the right place to ask this question!
You'll notice on the SSA 1099 total amount in the pink block
top right. Then a breakdown of those yearly amounts lower
left. And if you had had to have legal counsel to obtain
the arrearages, 5,300$ attorney fee somewhere on the form.
There is a procedure and you makes your choice.
1. lump it all on 2006 return regular way. And if your marginal tax
brackets for all years in question are the same, might as well do it
that way.
2. Use the LSE (lump sum election) to compute separates taxes on each
year then add same to your 2006 return. For information on this see
publication 915. I did this for two clients already this year.
3. Drive north of your house about, oh... 10 miles? to
Woodlawn, enter the building and bang on receptionist's desk
and tell them point blank, it's UNFAIR, and I ain't goin pay
no tax on this
4. hmmm... Engage suitable professional and affordable help in your
area, either an Enrolled AGent (EA) or Certified Public Accountant
(CAP). Ask what the fee is first.
(grin)
ChEAr$$,
Harlan Lunsford, EA n LA
Moderator:
What would I do without you, Harlan? I have already done
#4. But for #3, why go to Woodlawn when I can bop into
the IRS Office in Ball-a-mer with a reporter for the
Noo Yawk Times in tow and do the same thing. When the IRS
asks for a cite in support for my position, may I use your
name?
Of course, the Noo Yawk Times reporter will probaly contact
you so he can include your address and phone number in his
story. ROTFLMAO
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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