Tax Advice

The Tax Attic with Jerry Coon

January 28, 2010 // 0 Comments

  What to do if errors on your W-2 or 1099 Since deer season is over, the Lions are mercifully finished for the year, I’m too busy to go ice fishing, NASCAR doesn’t start until Daytona next month, and why watch golf without Tiger, I will get my cup of Herman’s Boy Pantlind Blend coffee and write an article for this week’s Squire. A few weeks ago, I wrote about not receiving a W-2 or 1099. This week, I will expand on what happens if the W-2 or 1099 is received, but it is incorrect or is the wrong form altogether. Do you have any recourse if the W-2 or 1099 has the wrong information on it when you receive it? Yes, you do. Remember that the original set of forms doesn’t have to be sent in to the appropriate agency, either the Social Security Administration or the Internal Revenue Service, until February 28. Since you normally receive the form in January, the employer has plenty of time to correct administrative errors such as an incorrect street address or wrong zip code. Those types of errors are easy to correct and most employers are quite accommodating. However, what can you do if the error is of the dollar amount variety, i.e. gross wages is wrong or the federal or state withholding is wrong? Can these errors be fixed? These errors are a horse of a different color. In the federal payroll reporting system within which all employers operate, the dollar amounts that are summarized on your W-2 have been reported quarterly to the Internal Revenue Service. The amounts withheld from your paycheck for federal withholding, Social Security, and Medicare taxes have been paid over to the IRS throughout the year. When you receive your W-2, it is a summary of the activity that occurred under your Social Security number throughout the entire year. If you believe there is an error in the gross wages reported or in the amount of federal tax withheld from your wages and you are correct, this can be a total nightmare for the employer. The company has already paid in the amounts withheld from your checks as well as the amounts it had to match for Social Security and Medicare […]

The Tax Attic — by Roger Allen, publisher

December 18, 2009 // 0 Comments

Issues beyond our comprehension My minister, Rick Tigchon, recently based his sermon on a Dr. Seuss book concerning going “beyond z.” The point of Rick’s sermon was that from time to time, we encounter events that simply just are not explainable. They go beyond our comprehension. They go where our alphabet currently ends at “z.” Of course, the number one example of this, especially applicable at this Christmas season, was the pregnancy of Mary and the subsequent birth of Christ. Mary was a virgin. Now that really was “beyond z.” All other events pale in comparison to this, but I do have one of my own to pass on. This past week, I was driving to the office on Northland Drive near 12 Mile Road when two deer just shot across the road in front of me. There was lots of traffic and they were lucky to clear all five lanes without getting hit. We all know the basic rule of thumb when it comes to deer—they travel in threes—so as I slowly continued on to the north, I looked into the woods where the other two deer came from. Sure enough, the third deer was standing in the woods. I kept watch in my rearview mirror and was surprised at what I saw. That third deer slowly walked up to the shoulder of the road and stood there, apparently looking and watching for cars to go by. When he was satisfied it was safe, he jumped across the road. Either that was the smartest deer in West Michigan or I had seen a “beyond z” event. Another example of something that goes beyond our comprehension is what has been happening with our state legislature—talk about going beyond z! The fiasco in Lansing goes beyond triple z. Tom Pearce, our local House Representative, has made several local appearances in the past few weeks. I was fortunate to hear him speak at a Rockford Chamber of Commerce luncheon last week. Tom is one of the good guys in the political arena and, in his final term, is doing his best to get good solutions to our current problems. Good luck, Tom. Among other issues, our state legislature has not dealt with the fact that our state […]

The Tax Attic with Jerry Coon – July 30, 2009

July 30, 2009 // 0 Comments

Do you qualify for the First Time Homebuyer credit? There are some government programs that seem to generate more and more questions. The federal First Time Homebuyer Program is one of those programs. The fact that there is $8,000 in totally refundable dollars at stake might have something to do with creating questions. Taxpayers are trying to fit home purchases into the credit. Some of those purchases do not qualify while some do qualify, but a particular scenario was not considered when the law was enacted and now requires some explanation. Let’s go over some of those instances where the credit is in question. The questions can be grouped in two groups. The first group concerns questions of whether the taxpayer is considered a first-time homebuyer. Did the taxpayer own or constructively own a home within the past two years? Seems like a straight-forward question, but it really isn’t. The second group of questions concerns the purchase. Who did the taxpayer buy the home from or jointly with, and does it qualify for the credit? The first group of questions comes up in conjunction with the requirement that in order to be considered a first-time homebuyer, the taxpayer must not have owned a personal residence for the past two years. For example, a taxpayer owns a personal residence, but five years ago converted that house to a rental when the taxpayer moved into a rented apartment. The taxpayer still owns the rental. Does the taxpayer qualify for the credit even though he/she still owns the prior residence? The Internal Revenue Service says that because the taxpayer did convert the prior residence more than three years ago and has not used the rental as a residence for even one day within the previous three years, he/she does qualify for the credit. Another example involves married taxpayers. A husband and wife have been separated for the last five years and file separate tax returns. The husband has not owned a house during the previous three years. The wife currently has owned and currently occupies a residence. Can the husband claim the credit because they filed separate tax returns, maintain separate households, and he has not owned a residence for the last three years? The IRS says that […]