Minor Tax Question

#1
A

allvol123

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#1
Purely hypothetical question posed:

Supposing a certain dufus(dufus to remain unnamed), filed his taxes last week. Also, suppose today this person received a W2 for some work his wife did early in the year that he completely forgot about. Does this person need to see about fixing this mistake? The total wages are completely inconsequential, roughly $150 for a few classes taught at a local gym. Would I be correct in assuming I could tell this person not to worry about it or is there the chance someone would nit pick over something like this?

PS - I know that this isn't necessarily politics, but I put it in here because this is where the smart people hang out.
 
#2
#2
I'm not claiming to be smart...but...for the amount specified I dont think it will matter in the long run. Legally, by the book, you should probably submit it...But I think the IRS has better things to do. I wouldnt worry about it. My two cents.
 
#3
#3
OrangeWilly said:
I'm not claiming to be smart...but...for the amount specified I dont think it will matter in the long run. Legally, by the book, you should probably submit it...But I think the IRS has better things to do. I wouldnt worry about it. My two cents.
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#5
#5
I'm pretty sure this is the way Willie Nelson's problems started.
 
#6
#6
Come on GA, I know you one of the smart ones. Offer up something more than some smarta$$ quip.
 
#7
#7
allvol123 said:
Come on GA, I know you one of the smart ones. Offer up something more than some smarta$$ quip.
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Like I have anything to offer other than smartass quips?

Technically this probably calls for an amended return but I don't think I'd worry about it. The increased tax liability wouldn't be more than about $30. If it gets caught, smile and write a small check.
 
#8
#8
I'm with you GA, kind of what I thought. Now just need to convince my friend's wife.
 
#9
#9
Back in 2003, due to a minor mixup within the world that is my personal finances...

I never paid the state tax on a new vehicle I bought out of state. I love it how the IRS lets it go for about three years until the interest is just right...Then they send the letter...with the amount that has been stuffed with fees and interest. Bummer paying that off.

If I made it through this without injury you should be fine.
 
#10
#10
AV, on the W2, you said that the income for the year was only $150? Was the W4 for said income filed as exempt or were taxes taken out of it when it was earned?

You are only required, by law, to file tax returns if you owe money. So, legally, you are probably free and clear.
 
#11
#11
Awesome Real, I knew there was a good chance you would be someone that knew this stuff.

Taxes were taken out of it and I am actually getting money back this year. So I will take that as a double NO, in terms of me needing worry about this?
 
#14
#14
therealUT said:
AV, on the W2, you said that the income for the year was only $150? Was the W4 for said income filed as exempt or were taxes taken out of it when it was earned?

You are only required, by law, to file tax returns if you owe money. So, legally, you are probably free and clear.
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nice post, trUT....(I'm thanking you and I wasn't even the one asking the question)
 
#15
#15
therealUT said:
You are only required, by law, to file tax returns if you owe money. So, legally, you are probably free and clear.
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Very good point. Heck, if he's already getting a refund anyway, the IRS may actually owe him a few bucks.
 
#16
#16
My aunt retired from the IRS with 34 years of service. She taught me a lot about filing returns, and while $150.00 isn't much, the fact you didn't claim it, albeit erroneously, could get you a letter from them.

Are they going to send jack-booted thugs to your house? No. But, and I'm only suggesting, I'd submit a revised return claiming the $150.

Perhaps a tax attorney or CPA could answer this for you as well.
 
#17
#17
MoonDogLeft said:
My aunt retired from the IRS with 34 years of service. She taught me a lot about filing returns, and while $150.00 isn't much, the fact you didn't claim it, albeit erroneously, could get you a letter from them.

Are they going to send jack-booted thugs to your house? No. But, and I'm only suggesting, I'd submit a revised return claiming the $150.

Perhaps a tax attorney or CPA could answer this for you as well.
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This is correct. Since a copy of that W-2 is submitted by the employer to the IRS, the chances of the IRS not eventually contacting you to inquire about the discrepancy in your reported income is remote. The process of companies filing W-2's with the IRS for employees is precisely to reduce the chances of unreported income in this type of situation. It may take them two or three years, but the IRS will more than likely eventually send you a letter stating that you didn't claim all of your income on your return, and they'll hit you for any unpaid tax plus penalties and interest. For the amount of unreported income that you're talking about, that amount will still be small.

So, in summary, you are technically required to amend the return and report the additional income. However, if you don't, the likely outcome is that you end up paying a slightly higher amount in two to three years.
 
#18
#18
therealUT said:
AV, on the W2, you said that the income for the year was only $150? Was the W4 for said income filed as exempt or were taxes taken out of it when it was earned?

You are only required, by law, to file tax returns if you owe money. So, legally, you are probably free and clear.
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This is erroneous information. By law, you are required to file a federal income tax return if your gross income exceeds a threshhold dollar amount (which is very low). Whether you owe money or not is irrelevant.
 
#19
#19
Have you, I mean this doofus, ever had issues with the IRS before? If not, let it go. If you have ever gotten anything from them other than a check, file an amended return. They will wait until year 6 when the penalties and interest on that $30 have added up to about $300. Been there, done that. They don't use lube when they bend you over either.
 
#20
#20
The taxes you owe on $150 might be at most $50. The IRS isn't going to go after something that small.
 
#21
#21
oklavol said:
The taxes you owe on $150 might be at most $50. The IRS isn't going to go after something that small.
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Actually, they will. They usually are looking for errors that will give them serious incremental tax revenues. However, if your stated gross income is less than the amount reported to the IRS on W-2's, they will come after the difference.
 
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