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About Mike Wellman
(Top Expert on this page)

Expertise
I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size. I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All other will be referred to the question pool.

Experience
Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.

Publications
New York Times, Wall Street Journal, Your Money.

Education/Credentials
BBA, Baylor University.

Awards and Honors
IRSOS.com won the Knowledgeweb award for educational excellence for content.

   

You are here:  Experts > Business > Corporate Law > Tax Law (Questions About Taxes)

Questions Answered By Expert  Mike Wellman 
In Category  Tax Law (Questions About Taxes)

SubjectDate Asked

Back taxes..11/5/2009
  Q: First I use to work for PWC in Chicago on the consulting side (SAP), just before the spin off, ...
  A: The fact that the taxes have already been assessed means that he cannot lay low if he has a bank ...
offer & compromise10/23/2009
  Q: I have submitted an offer and compromise to the IRS and have not yet heard back. I am planning on ...
  A: The times vary widely. You should allow 6 to 12 months from submission for it to be completely done. ...
offer & compromise10/23/2009
  Q: I have submitted an offer and compromise to the IRS and have not yet heard back. I am planning on ...
  A: Yes, you should wait to get married until your Offer in Compromise is resolved. Getting married will ...
Tax filing issues10/5/2009
  Q: We have not filed a return in 3 years due to some issues my husband is having with his SSN matching ...
  A: First, you are certainly not in any danger of jail. In fact, if you have had normal withholding or ...
Delinquent taxes9/29/2009
  Q: We did not file our federal taxes this year as we did not have the money and thought you could only ...
  A: You simply need to file the return and get into an agreement to pay the tax due. You can file Form ...
accounting from IRS9/18/2009
  Q: I gave the IRS $10,000 at the San Diego office two months ago. I still owe about $8,000 in back ...
  A: The IRS does not send acknowledgements of payments received. You can call (800) 829-1040 to find out ...
Tax refund due to deceassed relative.8/28/2009
  Q: A relative died in 2007. Upon settling her estate, the heirs discovered that she was owed nearly ...
  A: Any refunds that are due would belong to the estate and as such, would be paid to the administrator ...
mileage laws8/12/2009
  Q: I started working with my insurance company as an agent last august. I bought a new gas efficient ...
  A: I cannot say whether you will owe or not without all the details. Often the standard mileage rate ...
Major income tax problems...5/28/2009
  Q: I was divorced in Jan-2001...that year and the following years all up to 04' I have bulked together ...
  A: I have many people come to me who have not filed in a few years and they are terrified of the ...
IRS levy5/22/2009
  Q: The IRS has sent me a notice saying they may levy my SSI in 30 days. Can they use this levy letter ...
  A: A letter 1058 covers more than just your social security. A CP-90 is what is typically issued by ACS ...
Taxes Payment Plan New Laws5/6/2009
  Q: Do you know if it is truth that congress recently approved new laws that benefit people who are in ...
  A: Congress has not passed any laws on the subject recently. The IRS did announce a relaxed policy on ...
Tax Levy for 2003 tax4/20/2009
  Q: I haven't filed taxes since 2002. Apparently the IRS extimated my 2003 taxes and I didn't know ...
  A: Yes, you can file the actual return and it will replace the IRS assessment. However, this could take ...
Delinquent Filer4/15/2009
  Q: I have not filed income taxes since the 2003 tax year. I am expecting a refund for all delinquent ...
  A: The years prior to 2008 are delinquent and filing an extension will not change that so there is no ...
When Nothing Seems to Fit...4/13/2009
  Q: should you decide to answer this one. You better sit down though. In late 2002, I had been making ...
  A: Your situation is far from hopeless. There is no possibility of jail time either. The very worst ...
IRS Tax Lien on My Property3/30/2009
  Q: My ex-husband's and my divorce was final over two years ago. In the divorce, I received two ...
  A: First of all, even if the lien had attached to the property, the IRS would not "take" the property. ...
Tax audit3/29/2009
  Q: My ex husband is incarcerated. He informed me that they are doing an audit review of his taxes for ...
  A: First, who is doing the audit? The IRS cannot by law audit four years back, except in certain ...
Tax Lien3/27/2009
  Q: I am in the process of trying to get divorced. My husband left me and abandoned me financially. I ...
  A: Since your husband is an owner of the house now, the lien attaches to the property and remains until ...
Tax Lien3/27/2009
  Q: I am in the process of trying to get divorced. My husband left me and abandoned me financially. I ...
  A: If you were wanting to sell it, there is nothing you can do. However, the IRS recently announced ...
how do I find a preparer with experience in delinquent tax returns?3/27/2009
  Q: An accountant who said he had a lot of experience in dealing with the IRS and filing delinquent ...
  A: Well, I have to tell you that I have a conflict of interest here since delinquent taxes and ...
delinquent taxes and OIC3/26/2009
  Q: Last fall I filed 2005, 2006, and 2007 tax returns, and as such have a significant liability. I am ...
  A: (1) You can include the student loan payment on the 433-A, however, if you try to get into an ...
penalty abatement3/19/2009
  Q: Good afternoon, Wanting to respond to Irs to abate penalties. In 2007 payroll taxes were paid in ...
  A: There is just not enough information here to give you an answer. Penalty abatement are based on ...
repaying tax debt2/23/2009
  Q: I became disabled on February 15, 2009,I proceed to draw my short term disability then went on to ...
  A: When you get the bill for the tax due, you can get an installment agreement to pay the balance. ...
On Payment Plan2/17/2009
  Q: I was audited and it turned out I owed money in 2006. I signed up and was approved for the payment ...
  A: There is nothing to do on your tax return this year regarding payments made under your installment ...
deliquent taxes owed2/17/2009
  Q: I owe taxes of approximately $2500 (before penalties or interest) on my Federal Tax Return for 2005. ...
  A: There is no point in paying interest and penalties with the amended return because there is no ...
Spouse owes taxes2/16/2009
  Q: My spouse and I filed married for tax period 2005 & 2006, in 2005 my spouse failed to claim a 1099. ...
  A: They will not keep your refund if you did not file jointly. There is certainly no requirement that ...
Innocent Spouse Claim2/13/2009
  Q: I was married for thirty-four years. My husband passed away May 26, 2006. I learned that he had ...
  A: No you do not. You must meet all of the following conditions to qualify for "innocent spouse ...
Applying Tax Refund to Taxes Owed2/12/2009
  Q: I finally got caught up on my taxes using the services of a CPA. I owe the IRS $4000 from 2002 and ...
  A: The answer is straight forward, the refunds for 2003 and 2004, assuming they were caused by ...
Home Improvement2/11/2009
  Q: I have been hearing that certain home improvements are tax deductible. Is a new concrete driveway to ...
  A: Home improvements are not deductible unless you have a legitimate home-office situation and the ...
OIC & Form 433-A1/27/2009
  Q: I have questions about OIC Section VI, and Form 433-A, Section 4 and Section 9. According to the ...
  A: Filing and offer in your circumstances is tricky and really not advised. Your roommate of course ...
Haven't Paid Taxes in awhile...1/26/2009
  Q: I have a problem that I've let linger far too long mainly due to confusion or a lack of ...
  A: "1. I'm thinking now would be the best time to file but was unsure as to how to file since I have ...
tax laws for 10991/18/2009
  Q: i work for a small maintenance company and they take no taxes out of my check. the checks are wrote ...
  A: Unfortunately, you will likely not get a refund and may owe a lot of tax because of the way you were ...
LIEN11/6/2008
  Q: I have a federal tax lien on my record from my ex-husband businesses dated back in 1987 thru 1992. ...
  A: Showing the IRS this paperwork will do no good. Contracts that shift tax liabilities do not bind the ...
941 S-Corp Question11/4/2008
  Q: I shut the doors of my mortgage brokerage firm in the summer of 2008. We were an s-corp in ...
  A: You can wait and see if they do not assert the penalty. Not likely, but possible. If the do, you can ...
941 S-Corp Question11/4/2008
  Q: I shut the doors of my mortgage brokerage firm in the summer of 2008. We were an s-corp in ...
  A: If the corp. can or won't pay the taxes, the IRS will likely assess what is called the Trust Fund ...
Tax withholding10/31/2008
  Q: My son is working for a company that pays him as a contractor with no taxes withheld. He receives a ...
  A: Yes he does. He also needs to understand what his filing responsibilities will be. Go to: ...
OIC8/4/2008
  Q: If a currently out of work, single (divorced) taxpayer that is seeking employment, but hasn't found ...
  A: If you are currently not employed, the IRS will look at the last three years of income, typically ...
K-1 question7/23/2008
  Q: I think I understand the function of the K-1 but I am being asked to provide this form to a person ...
  A: If she was a partner in 2007, she is entitled to a K-1 or a some statement showing her share of ...
Injured spouse deductions allotment7/18/2008
  Q: I am trying to fill out an injured spouse form, as I recently remarried and am not liable for my new ...
  A: If you itemize your deductions, enter each of your separate deductions, such as employee business ...
child support6/29/2008
  Q: I have been married a year, and my husband and i just filed joint taxes. My husband has to pay ...
  A: If his case has advanced to the stage where the IRS is involved - then the refund will likely be ...
IRS Lien on Property6/26/2008
  Q: The title search on the property my husband and I are in the process of purchasing (a short sale) ...
  A: The lien will only be released if the tax is paid or the IRS subrogates the lien. If there is enough ...
past year tax6/17/2008
  Q: I live in NY state. I didn't file my state and federal tax for year 2006 and 2007.My income is same ...
  A: If you do not know what your income or expenses were for 2006 and 2007, you can base it on your 2005 ...
Bonus4/11/2008
  Q: What does the tax law say about how bonuses must be paid and taxed. For example is a single bonus ...
  A: If they will not make a manual adjustment than yes, spreading it out is better. They cannot pay it ...
Bonus4/11/2008
  Q: What does the tax law say about how bonuses must be paid and taxed. For example is a single bonus ...
  A: A bonus is taxed just like regular salary. The problem comes in when you get a bonus in large lump ...
1099-misc question4/10/2008
  Q: i recently received a 1099 misc. i know that i must file schedule se and schedule c. i was ...
  A: You may not deduct as a business expense on your Schedule C the costs of educational expenses that ...
1099 and W-44/8/2008
  Q: I am both a 1099 contractor (with one contract to only one company, making less than $3,000 in 2007) ...
  A: You will report the W-2 income on your 1040 and your 1099 income on Schedule C or C-EZ. You can also ...
WA State Sales tax4/4/2008
  Q: Mr. Wellman, My construction company is currently two months behind on paying our states sales tax. ...
  A: I cannot answer for Washington specifically, because I have not dealt with them. But I have dealt ...
Engagement Letters for Tax preparers3/19/2008
  Q: For the first time ever, we had an engagement letter added to our prepared taxes. This seemed like ...
  A: No it is not true. It is a good idea for the preparer to get one because it protects them. It really ...
1099-Misc income3/1/2008
  Q: I'm trying to help a friend with his tax return and I've never come across this issue. He got a W-2 ...
  A: You could enter it on 4797 but the easiest thing is to put it on line 21 with an offsetting entry on ...
delinquent federal tax questions2/22/2008
  Q: I have not filed federal or state(CA.)income taxes since 2001. I am in the process of filing all ...
  A: (1) No income - no requirement to file (2) You cannot get a refund if you had no income (3) No it ...
debt settlements2/14/2008
  Q: My ex-boyfriend and I got a loan together. Well to make a long story short when he promise that he ...
  A: Debt cancellation is generally taxable. However, if you were insolvent at the time, you can exclude ...
charged off loans and taxes2/7/2008
  Q: I just received a tax statement from a credit card account that has been closed(charged off) for ...
  A: Cancellation of debt is considered income and the lenders are required to send out a 1099-C on those ...
childs disability award2/7/2008
  Q: I was just recently approved for disabilty with social security. My son as a dependent will get an ...
  A: The income is reported on the return of the person who has the legal right to receive the benefits. ...
estate taxes vs. income taxes2/6/2008
  Q: Among other assets my mother left me several stocks. (The total amount of the estate will be over ...
  A: There is only one value for both. The value is the market value at the date of death or precisely ...
why do i owe taxes2/1/2008
  Q: i am 26 going on 27 years in age and i made an estimated 60k this past tax season. the irs takes ...
  A: Most likely because you are claiming too many exemptions on your W-4 or using the wrong filing ...
Married filing seperately with itemization, but spouse will not cooperate1/31/2008
  Q: I am asking this in proxy for my girlfriend. She is still legally married, but living apart from her ...
  A: If she filed MFS, the IRS will likely contact her husband and he may be compelled to file MFS and he ...
Gift of Cash1/30/2008
  Q: If I gave my children a cash gift for the 2007 tax year, does the money have to be deposited before ...
  A: The date the checks were mailed or made available to the kids. If the gifts were less than $12,000 ...
Dependant tax question1/30/2008
  Q: I have a 18 yr old daughter that is a full time student and living with us, and working. She ...
  A: You are entitled to claim your daughter as a dependent on your return but you cannot claim her ...
1099-A Deed in lieu of foreclosure1/30/2008
  Q: I have a big problem. I did a deed in lieu of foreclosure with a lender in CA that had both the ...
  A: I can't explain why you got two 1099's except that it makes sense that one was for the first and the ...
claiming mortgage interest1/30/2008
  Q: My grandparents recently fell ill and My uncle purchased their home. Via Mortgage. However, Due to ...
  A: In order to claim the mortgage interest deduction, you must actually make the payments AND you must ...
1099 Misc wrong1/30/2008
  Q: I received a 1099 Misc form and in box 7 the amount is way more than I actually received. The only ...
  A: Report what he actually paid you. In about a year, you may receive a letter from the IRS asking ...
Sole proprietor tax records request1/28/2008
  Q: I was recently looking to buy a business from an associate of mine. I requested the tax returns for ...
  A: You cannot compel the release of tax information and there is no place you can go to get it. The ...
Rental Property1/28/2008
  Q: I have a rental property that I purchased that needed a good amount of repairs to make to make it ...
  A: Some items such as the floor and aluminum siding must be capitalized. Others, like the windows can ...
Business Use of Home1/27/2008
  Q: I work for a startup and out of convenience to my employer, I work out of my home. I plan to deduct ...
  A: Yes, but I am speaking of things such as utilities, insurance and mortgage interest. You cannot ...
Claiming dependants1/27/2008
  Q: I was divorced several years ago and had agreed to allow my ex-husband to claim one of my children ...
  A: Well, the worst thing that can happen is that they will disallow your deductions and any credits ...
Income Tax Interception1/27/2008
  Q: My daughters father has two warrants / judgements ($7740.00) for back child support. For the last ...
  A: I am sorry but no. Since she will file as single - there will be no connection with her and your ...
2007 turbo tax for 20081/25/2008
  Q: I know that there are new laws every year. What do you think the harm would be if I did my taxes up ...
  A: Turbo Tax 2007 is the current year version for preparing 2007 taxes due in April 2008. Turbo Tax ...
Follow up to Business Tax Question1/25/2008
  Q: Sorry, we formed it under an S Corporation. Does this help? I asked the following question (see ...
  A: If it was a Sub S, they should have filed an 1120S and sent you a K-1 each year. If they did not, ...
Income Tax1/25/2008
  Q: I am in a bit of panic mode here, I have had 2 jobs for a few years now and in Feb. of 2007 I was ...
  A: The company has until 01/31 to mail NW-2's. They are required to mail to the last known address. I ...
10991/24/2008
  Q: My son was hired by a gentleman to work in his buisness. He decided the hourly pay, gave my son a ...
  A: Employers are responsible for withholding and paying over taxes of employees - but not for ...
Withholding Payroll Taxes for Investment1/24/2008
  Q: Is it legal to max out your dependency status to nine dependents on your W-4 when you are single ...
  A: It is not legal and, if you owe more than $1,000 when you file your return, you will pay a 10% ...
2008 Capital Gains1/24/2008
  Q: My father-in-law told me that in 2008, there will be no capital gains tax. As I read about it, it ...
  A: Like most father-in-law advice, it has the ring of truth to it but it is not totally accurate. The ...
Personal taxes1/24/2008
  Q: My Fiancee is getting a 1099 (making no more than 9000 for the year) he is claiming his self, our ...
  A: If you get a 1099 - you are considered by the IRS to be self-employed. His employer is just saving a ...
question1/24/2008
  Q: i did not work last year but had a baby can i still claim taxes?
  A: You are not required to file. Since you had no earned income, you cannot get the earned income ...
insurance reimbursements taxable?1/24/2008
  Q: Our condo suffered interior water damage. Our homeowners Ins issued a check to us less the ...
  A: Sure, but he will get in trouble for it. If he reports it, you may get a letter in a year from now ...
Race Car Driver and sponsors1/24/2008
  Q: I see that the expense for the sponsor maybe deductible but is it taxable to the individual who is ...
  A: Yes, but only if his sponsorship income exceeds his expenses from racing (doubtful but possible). As ...
insurance reimbursements taxable?1/24/2008
  Q: Our condo suffered interior water damage. Our homeowners Ins issued a check to us less the ...
  A: He only pays taxes on money he received. If he is an accrual basis taxpayer (unlikely) and he ...
1099 - But we never took the money.1/23/2008
  Q: Last year, my husband had surgery. He was scheduled to take short-term disability payments while he ...
  A: You have constructive receipt of the money so under the law, it is income to you - even if you do ...
My deceased son1/21/2008
  Q: I had my baby in may 2007 and he passed away the same day. I was told that as long as I have proof ...
  A: I am sorry for your loss. I lost my nineteen year old a while back. This issue is a matter of state ...
Real Estate Tax1/21/2008
  Q: Greetings, I paid estimated property taxes in 2005 and 2006. Now the tax is finalized and I am ...
  A: If you actually paid and deducted estimated taxes in 2005 and 2006, you would only report the actual ...
taxes1/21/2008
  Q: In 2006 my mother in-law transferred about $150,000 in stocks to my husbands account as a gift to ...
  A: First, the lifetime gift exclusion is $1,000,000. When property of given to someone, the donee ...
Tax Preparation Costs1/21/2008
  Q: I am a Realtor in SC who formed an LLC last year and will be filing as a "S" Corporation. My ...
  A: Well, it it like asking how much will it cost to paint your house without ever seeing your house. ...
unpaid taxes1/20/2008
  Q: I owe IRS about $1800.00 that I am making installments monthly on. That is such a small amount but I ...
  A: First, you can request an abatement of interest and penalties without paying off the liability. You ...
federal taxes1/18/2008
  Q: My husband and I are seperated.We live in Pennsylvania.It is my understanding that we have to be ...
  A: If you file separately, each of your refunds will be determined independently based on your separate ...
10991/18/2008
  Q: Other than independent contractors and lawyers, who else should get a 1099 M(my CPA firm, etc.)? ...
  A: It is not the type business that is important - it is the form of organization. Corporations do not ...
Corporate draw1/17/2008
  Q: My son & I started a corp in Aug and we are on a fiscal year.(july through June). I am not getting ...
  A: If it is a corporation you must pay him a salary/wage and do all the payroll reporting and ...
federal taxes1/17/2008
  Q: My husband and I are seperated.We live in Pennsylvania.It is my understanding that we have to be ...
  A: In order to claim head-of-household, you do not have to be legally separated. You must have lived ...
delinquent tax notice for 20051/15/2008
  Q: I received a deliquent tax notice from my 2005 tax return from the IRS. They claim I owe another ...
  A: It depends on what you mean by "negative returns". If you had positive adjusted gross income but the ...
Withholding Taxes1/15/2008
  Q: I started my current job on August 28, 2005. Before i started, the office manager had me fill out a ...
  A: First, you will not get in trouble but you may end up owing tax and your half of social security. ...
Deducting rental property1/14/2008
  Q: I'm a military member who moved from Florida to Illinois but due to the bad market I couldn't sell ...
  A: You will claim the rental income on Schedule E, which is attached to your Form 1040. You can deduct ...
W2 to 10991/14/2008
  Q: I have been switched from W2 to 1099. What do I do first? How do I get set up to make quarterly ...
  A: You will file your return reporting your income on a Schedule C, which is an attachment to your Form ...
Taxes on Pension Plan Withdrawl1/10/2008
  Q: I became separated from my employer in 2007 and have an opportunity to withdraw money that they ...
  A: They will withhold 20% at the time of the distribution. You will pay the remainder of tax and ...
Travel1/10/2008
  Q: My husband worked out of state last year for about three months and he had to pay for his plane ...
  A: If he was an employee, he can deduct these items as itemized deductions on his Schedule A - under ...
Capital Gains Tax1/9/2008
  Q: I bought a house four months ago and have been living in it as my primary residence. I bought it for ...
  A: That is correct. If the primary reason the home is being sold is due to job related relocation, a ...
tax write off1/8/2008
  Q: I have a question, I own a small business,Last year I licensed It.I wanted just the name at ...
  A: You will not be able to write off the equipment until you begin operation, regardless of the year. ...
tax write off1/8/2008
  Q: I have a question, I own a small business,Last year I licensed It.I wanted just the name at ...
  A: You can write off all machinery and equipment as well as operating costs of your business. However, ...
contract labor1/4/2008
  Q: My boyfriend is an employee for this guy and he is full-time but is not taking out taxes and he ...
  A: Whether he is an employee or an independent contractor is based on individual facts and ...
22 yr. old as a dependent1/3/2008
  Q: I did not claim my daughter on my taxes for 2006. She was working full time but still living at ...
  A: For 2006 you could not have because she was over 19 and not a full-time student. For 2007, she ...
city taxes12/26/2007
  Q: why do i have to pay city tax where i work at and residential tax where i live me and my wife both ...
  A: I am sure you understand that I cannot give you specifics without knowing all the details That goes ...
city taxes12/26/2007
  Q: why do i have to pay city tax where i work at and residential tax where i live me and my wife both ...
  A: The laws on local taxation vary by state and city. But as a general rule, you pay tax where you earn ...
Newly established sole proprietorship12/20/2007
  Q: I am a resident of CA. I normally file Married/Joint return. I started a sole proprietorship this ...
  A: You report your loss using Schedule C, which is part of your Form 1040 filing. It is an attachment. ...
Letter from IRS ref 1099 MISC12/19/2007
  Q: I rec'd a letter stating that I did not report $27158.00 1099 MISC income from a employer. I did ...
  A: Those are all valid depending on what your job was. There could be others. Mileage to and from work ...
1099's12/19/2007
  Q: How does a company know which vendors are eligible for 1099's and which are not? Example... UPS ...
  A: Yes - but only if the company that repairs the equipment is not incorporated or operating as a ...
1099's12/19/2007
  Q: How does a company know which vendors are eligible for 1099's and which are not? Example... UPS ...
  A: The law is very specific about that. Generally, 1099's are sent to individuals (not corporations or ...
Letter from IRS ref 1099 MISC12/19/2007
  Q: I rec'd a letter stating that I did not report $27158.00 1099 MISC income from a employer. I did ...
  A: If you had expenses associated with the $27,158 in income then you should complete a Schedule C and ...
Offer In Compromise12/19/2007
  Q: I am preparing an offer in compromise. The taxpayer owns approximately 7 parcels of real property, ...
  A: They will look at each property individually. The lowest a property can be valued is zero. That ...
Filling Taxes for a LLC12/17/2007
  Q: When does an LLC have to file their taxes by? Also when are W-2's and 1099's due out to our ...
  A: If you are a single member LLC, then you file a Schedule C with your personal tax return, which is ...
2005 tax question12/13/2007
  Q: My spouse (now ex in 2006) refuses to file 2005 taxes that were prepared as joint b/c the tax ...
  A: Assuming your divorce decree does not state otherwise, you should file as married filing separately ...
delequent tax returns for contractor12/11/2007
  Q: I know someone who hasn't filed a tax return in several years. He has worked as a subcontractor in ...
  A: The first thing he may find out is that the IRS has filed some of those returns for him based on the ...
Racing Sponsorship Tax Wrte-Off12/10/2007
  Q: Mr. Wellman, If a company sponsors a race car driver, how much of that is tax-deductible? Thank you ...
  A: The entire amount is deductible as advertising expense. Where companies get in trouble is when they ...
Racing Sponsorship Tax Wrte-Off12/10/2007
  Q: Mr. Wellman, If a company sponsors a race car driver, how much of that is tax-deductible? Thank you ...
  A: Theoretically, all the expenses can be deductible but they have to be considered thru the prism of ...
Separation and Mortgage Interest Tax Deductions12/7/2007
  Q: My husband and I have been living in separate residences for 16 months. He is staying in the home we ...
  A: In order to deduct the interest you must be obligated on the note, it must be secured by the ...
Inheritance Tax12/5/2007
  Q: Mike, My wife's parents both passed away. They left to my wife and her brother their home (pretty ...
  A: As for federal taxes, no taxes will be due. The federal estate tax provides a $2,000,000 exemption ...
Husband is W2; I am W2 and 109912/5/2007
  Q: Mike, I started the beginning of this year as a W2 employee and then left my job and was a nanny ...
  A: You will file a Form 1040 and report all your W-2 income under "Wages". Your 1099 income will be ...
What is the taxability of a cash "gift" to an employee12/4/2007
  Q: We have an employee who lost her home in the California wildfires. A couple of years ago, the ...
  A: The employee/employer relationship creates special problems with gifts. You are limited to $25 per ...
Sales Tax12/3/2007
  Q: Can I claim sales tax, unemployment tax, etc. which I paid for each month/quarterly for my business ...
  A: If you are talking about unemployment tax paid for your employees - sure. As for sales tax paid, if ...
Federal Tax lien12/3/2007
  Q: I am trying to purchase a house through a short sale. Not only is the owner in financial distress, ...
  A: What he would have to do is file a request for a subrogation of the lien. It requires a lot of ...
Internet Business12/2/2007
  Q: I own a small Internet Business doing marketing online. One of my primary sources of income for 2006 ...
  A: If you are talking about groceries and/or household items you would ordinarily purchase for personal ...
child care12/1/2007
  Q: what do i need to claim child care i pay out to a person who is watching my child
  A: You claim child care expenses on Form 2441, which is attached to your tax return. To complete the ...
Paying taxes11/28/2007
  Q: SO I recently lost my "legit" job and have only been able to make ends meet at home by working an ...
  A: You would be considered "self-employed". You report your income on a Schedule C, which is an ...
Cashing out my 401K11/27/2007
  Q: I am going through a divorce and need buy my half of the house. I plan to do a refinance and ...
  A: Yes, that is correct. So I advise you to put another $10,000 aside, in addition to what is going to ...
Cashing out my 401K11/27/2007
  Q: I am going through a divorce and need buy my half of the house. I plan to do a refinance and ...
  A: They will withhold taxes at 20% but it will not be near enough. Make sure you have about 40% set ...
Marriage11/21/2007
  Q: I have recently gotten married, but my new husband doesn't want me to use his last name, because he ...
  A: The IRS does not key on names, they key on social security numbers. You do not inherit his tax ...
payroll taxes11/16/2007
  Q: I recently started with a company in which I work out of my home originating loans. Rather than ...
  A: No, it is not normal and failing an agreement with you to do it, it is not legal. They benefit by ...
Tax Liens11/15/2007
  Q: I own 2 corps. One went under but fed taxes were still owed for 941's. Fed Lien was placed on the ...
  A: No. However, if you continued operating the same business under another corporate shell, using the ...
Soc Sec Taxes11/6/2007
  Q: My husband, by definition is NOT self employed or a subcontractor. He earns an annual salary, does ...
  A: If he is receiving a 1099-misc, he is considered self-employed. Whether he is or not is another ...
Tax implications of withdrawing principle from Roth IRA11/2/2007
  Q: I would like to withdraw the principle from my Roth IRA - leaving all the interest still invested. ...
  A: A qualified distribution is generally, any payment or distribution made after the 5–taxable–year ...
Tax implications of withdrawing principle from Roth IRA11/2/2007
  Q: I would like to withdraw the principle from my Roth IRA - leaving all the interest still invested. ...
  A: Unless an exception applies, most distributions from a Roth IRA before the owner reaches age 59 1/2 ...
taxes fertility treatment10/24/2007
  Q: I am wondering if I can write off the cost of infertility treatments on my taxes. I live in ...
  A: You can include in medical expenses the cost of the following procedures to overcome an inability to ...
Adult Student Dependent10/24/2007
  Q: My unmarried 23 year old son is a graduate student at an out-of-state public university. He has ...
  A: I think the confusion comes in when we talk about temporary absence. I assumed from your question ...
Adult Student Dependent10/24/2007
  Q: My unmarried 23 year old son is a graduate student at an out-of-state public university. He has ...
  A: Your son may meet all the requirements except the residency test. You can only claim him if he ...
Estimated Tax10/23/2007
  Q: Mr. Wellman, in July I received a property lease check for mineral lease then received another more ...
  A: I cannot tell you if you need to make estimated taxes on the lease payments without knowing ...
Filing Joint vs. Single & Money owed by and Ex10/22/2007
  Q: I am planning on getting re-married in November. I had married my first wife in the month of ...
  A: (1) No, you will have to file as Married Filing Jointly or Married Filing Separately. (2) Yes, the ...
What is a K1 Form?10/19/2007
  Q: I am sure the answer is complex, but could you please give me an overview of what a K1 form is? How ...
  A: Certain types of businesses like partnerships and Sub-Chapter S corporations do not pay taxes. The ...
How long to Hold these Forms?10/18/2007
  Q: Quick question. How long are you supposed to keep past returns (both personal and business) on file ...
  A: Assuming they are payroll taxes, I would tell the IRS that your partner was responsible for all ...
How long to Hold these Forms?10/18/2007
  Q: Quick question. How long are you supposed to keep past returns (both personal and business) on file ...
  A: It varies with the type of records but generally seven years is sufficient. However, records that ...
Previous years / amended return10/15/2007
  Q: I was looking back at my previous tax returns this year and noticed that I may have not filed my ...
  A: If you are also going to file as married filing separately, then your wife needs to do nothing. If ...
Claim Child10/15/2007
  Q: If a mother is incarcerated (January 2007) and the child did not live with the father at all during ...
  A: It will be hard to undue it. Typically, the other spouse claims the child too and then they present ...
vehicle deduction on ranch10/15/2007
  Q: I operate a cattle ranch and have deducted a 4 wheel atv in the past for ranch use. I am now in need ...
  A: As long as you can show the business use of it, it can be an ATV, go-cart, donkey or whatever. A ...
persoal loss carryover10/14/2007
  Q: How do I report a personal loss carryover of $83,000. This is not a capital loss with the $3000 ...
  A: If you are talking about a Net Operating Loss, which would be a business loss with some adjustments, ...
w910/8/2007
  Q: When a company requests venders to sign w9, is the w9 ever expire? Do they have to sign again after ...
  A: A W-9 does not expire. Another one would need to be filed only if something changes. The only thing ...
Gambler /Investor10/4/2007
  Q: I have not filed my 2005 and 2006 Federal and Colorado returns. In 05 i took control of a 350k trust ...
  A: In order to see where you stand, you will need to file the outstanding returns. If you owe for ...
Should i Ammend?10/4/2007
  Q: I'm in Maryland. My ex-wife cashed/transferred/swept(?) a JOINT account 1 month AFTER our divorce ...
  A: It is unfortunate, but a joint account is a joint account and if she had unfettered access then she ...
tax deductibility of HELOCs9/24/2007
  Q: What are the rules regarding the tax deductibility of HELOC's for primary and second homes? Thank ...
  A: When you refinance acquisition debt or take out additional debt such as a HELOC, you can deduct the ...
Corporate Income Tax9/18/2007
  Q: If a corporation does not pay its income tax, are the shareholders personally and individually ...
  A: As long as a corporation dots all the I's and crosses all the T's, the shareholders cannot be held ...
exempt9/13/2007
  Q: i have been told that going exempt can be a good strategy.. last year i claimed exempt for 3 or so ...
  A: I certainly agree with a strategy that allows for the smallest refund possible. It does not make ...
claim tax credit if I open a family childcare9/12/2007
  Q: Mr.wellman: I plan to open a family child care in my house. Can I claim some tax credit since I use ...
  A: You can deduct expenses associated with operating your home as a daycare including depreciation and ...
Oil Depletion allowance for Royalty owner9/11/2007
  Q: Mr. Wellman, My question is regarding taking depletion allowances on my Federal Tax return. I have ...
  A: Well, I do not think it is an excise tax but if the Oklahoma Tax Commission says it is not ...
I am filing for permenet disibility and we need to use money from my wifes 401k plan9/9/2007
  Q: I had my own buseness and recently became sick and am applying for permenet disibility. I have no ...
  A: There is a 10% penalty on early withdrawal - plus the tax on the withdrawal at your marginal tax ...
DOCTOR VISITS9/8/2007
  Q: Wellman, I am a General Motors retiree and I have great insurance coverage benefits, but my ...
  A: Medical costs are deducted on Schedule A, the form used to itemize deductions. In order to use ...
our last tax return9/1/2007
  Q: My wife had our joint tax returns both state and federal put into her personal account and I have no ...
  A: If the checks were made out to both of you, the bank should not have allowed them to be deposited ...
Phatom Income8/29/2007
  Q: I hope I am not way off on this. A client of mine has been working for a startup company. He is ...
  A: No, he does not get the money he gets the stock. The company normally sells the shares, but as his ...
Phatom Income8/29/2007
  Q: I hope I am not way off on this. A client of mine has been working for a startup company. He is ...
  A: Normally the corp will sell the shares. For example, assume the value of the stock is $10,000 when ...
Phatom Income8/29/2007
  Q: I hope I am not way off on this. A client of mine has been working for a startup company. He is ...
  A: They are not taxable until he sells them. What happens in a lot of cases is they have to sell enough ...
Investment Club Question8/29/2007
  Q: and thank you for providing this service. My question concerns a delinquent tax return I filed for ...
  A: The IRS abates penalties for "reasonable cause". Reasonable cause is in the eye of the beholder. One ...
Question on taxes doing business over the internet8/29/2007
  Q: Im a 20 year old college student, whois completely independent and reside in Raymond, Maine. I am ...
  A: You really don't need to get a tax ID unless you intend to hire employees or operate the business as ...
Taxes on Legal Settlement?8/28/2007
  Q: My husband and I just made settlement on a 10 year legal battle of emminent domain for our property. ...
  A: If the property was abandoned by you to them, then the award is basically the sales price. You will ...
Business owner taking acquiring MBA - Mileage8/28/2007
  Q: I'm a business owner of an LLC company. My business is expanding and I decided I need to continue ...
  A: The mileage is not going to be deductible. In order to qualify, the expenses must be "required", not ...
Land sale contract8/27/2007
  Q: Mike, I have a purchaser of a land contract who wants the ability to have tax deductions from his ...
  A: No, he can't do that. He will have an installment sale and will recognize capital gain on the ...
Land sale contract8/27/2007
  Q: Mike, I have a purchaser of a land contract who wants the ability to have tax deductions from his ...
  A: In order for him to deduct the interest as personal residence interest he must: (1) Be legally ...
Taxing Mileage8/25/2007
  Q: Recently our company was acquired by a larger entity and after reviewing my pay stubs it seems they ...
  A: Mileage reimbursement for actual use of your car should not be taxed. However, if it is a ...
LLC vs. Corporation tax rates8/23/2007
  Q: I'm a Speech Language Pathologist who needs to start a business in order to privately contract my ...
  A: You can write of legitimate expenses regardless of the form of organization. Unless you are required ...
2004 taxes8/20/2007
  Q: What was the maximum income for a single person in 2004 before he had to file taxes? ANSWER: ...
  A: The $7,950 applies to income such as wages earned working for someone else, the $400 applies to ...
back taxes8/18/2007
  Q: will try and make short . We own back taxes to state of Ky been working with them this week to do ...
  A: The state, like the IRS must notify you before a levy action on your bank account. Furthermore, ...
Retirement penaltiy8/17/2007
  Q: For a first home purchase I want to pull out of my retirement plans with 2 different ...
  A: First, I assume you are talking about IRA's. The exception applies to IRA's and not other retirement ...
gift tax/and property sale8/13/2007
  Q: I understand that my mother can give me a yearly gift of up to $12,000 that will be tax exempt. My ...
  A: First, no gift your mother gave you would ever be taxable to you. However, if a gift exceeds $12,000 ...
capitol gains on sale of house8/11/2007
  Q: I am selling a house that my parents had transferred the title to me 6 years ago. Do I have to file ...
  A: You do not need to file anything prior to your return, however, if the tax is significant, you may ...
Deliquent Taxes8/11/2007
  Q: I was totally disabled for the years 2003 ad 2004. I received disabiliy income from disability ...
  A: When you get your bill for the penalty and interest due, you will be able to get into an installment ...
Delinquent tax - capital gains?8/9/2007
  Q: First, let me explain how I got into my predicament. And please bear in mind that I have VERY little ...
  A: First, you can stop worrying about any criminal problems. There will be none. The worst thing that ...
tax liability on proceeds from inherited mutual fund shares8/3/2007
  Q: My step-father passed away in June. I am one of 7 siblings that will will equally split shares in ...
  A: You will not likely have any liability beyond the interest you spoke of. Whether any estate tax ...
taxable state refund8/2/2007
  Q: The IRS has determined that there is a deficiency in our income tax this year. My husband's company ...
  A: The deduction is taken on your Schedule A. Presumably you would not have deducted the tax from the ...
taxable state refund7/31/2007
  Q: The IRS has determined that there is a deficiency in our income tax this year. My husband's company ...
  A: The repayment of the tax from the state it was erroneously paid to is only taxable if you itemized ...
finace that owes taxes7/26/2007
  Q: my finace' is in the process of OIC with the IRS, we plan on getting married in Decemeber. Does his ...
  A: Possibly. You do not become liable for his taxes and they cannot look to your assets to satisfy his ...
Delinquent taxes, combat exclusion and amendmendts7/24/2007
  Q: Wellman, First let me thank you for providing this service. I am trying to educate myself by reading ...
  A: 1. If you were divorced on the last day of the year, you are considered divorced for the entire ...
Tax error7/24/2007
  Q: I used Turbo Tax to file my 2005 tax return. In utilizing this a mistake was made in totaling the ...
  A: The first question is - who's mistake was it? If there was an error in the Turbo Tax program itself, ...
2000,2001,2002 Federal Tax Returns7/20/2007
  Q: A friend informed me recently that he had purchased common stocks in the year 2000 with his IRA ...
  A: A person has three years from the due date of a return to amend it, after that, any refund that may ...

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