Today, we’re answering your tax questions on the Ilyce Glink Show. We have Merry Brodie, an Enrolled Agent and owner of several Jackson Hewitt Franchises in the Atlanta area, and Bill Nemeth, an Enrolled Agent who is president of the Georgia Association of Enrolled Agents (4GAEA.org).
What is an Enrolled Agent? Here’s a summary from the GAEA website:
The Georgia Association of Enrolled Agents is the organization of and for Enrolled Agents. The principal concern of the Association and its members is honest, intelligent and ethical representation of the financial position of taxpayers before governmental agencies. Members of GAEA are required to complete a minimum of 30 hours of continuing professional education each year in the interpretation, application and administration of federal and state tax laws in order to maintain membership in the organization. This requirement surpasses the IRS’ required minimum of 16 hours per year.
If you have questions for them, call Merry at her office (770-446-8545) and Bill on his cell (770-616-1638).
This year’s tax news: The biggest news is that the Making Work Pay tax credit of $400 or $800 (married filing joint) and if you had a refund less than $800, you may be looking at owing tax. Georgia’s Legislature has has been quiet this year, Bill said. He won’t see any major tax activity until January.
BEN is in the US Marine corps. His return was flagged by the IRS as a victim of Identify Theft. He didn’t see his refund until August and it was extremely frustrating to deal with the IRS. How can he mitigate the problem this year?
BILL’S SUGGESTIONS: Get a special PIN number from the IRS so they know it’s you when you send in your tax return. Also, consider calling an enrolled agent and getting a copy of the IRS transcript (whatever information the IRS has on the case). The Watchdog agency just reported on how the IRS handles identify theft and they gave the IRS an extremely low grade. So, they have a long way to go.
ILYCE’S SUGGESTION: Contact the Military Financial Assistance office for extra help here. It’s a special benefit for the Military that might help.
ASHLEY did a special Roth Conversion to a Roth IRA and has since gone back to school. So his income is next to nothing this year. Can he take the entire rollover amount this year instead of spreading it out over two years?
BILL SAYS: Yes you can. The IRS does give you the flexibility and you can play with the amounts on IRS Form 8606, page 2. That’s where you specify amount of tax you want to pay on Roth conversions. You can do any percentage.
AMANDA is a salaried employee of nonprofit broadcasting. But as an on-air personality, she has a lot of personal expenses that are not reimbursed to get gussied up for her job. She can’t do her own hair so she has her hair done professionally once a week. Can she deduct these expenses?
BILL SAYS: I can vigorously defend that this is ordinary and necessary expense related directly job performance. We see this regularly with television professionals, actors and so on. There are makeup and wardrobe requirements. For W2 employees, these expenses go on Schedule A, itemized deductions and non-reimbursed business expenses. There is a 2 percent floor of the total Adjusted Gross Income (AGI).
DANA did a short sale on her personal residence and the credit union says they are sending her a 1099 for the $14,000 loss. Does she have to pay taxes on the phantom income?
BILL SAYS: You’re going to get the 1099 from the lender, and they will send that to the IRS. But the IRS is not expecting you to pay taxes on this phantom income through 2013.
MERRY SAYS: But you still have to tell the IRS that this is related to your primary residence and not a credit card. You’ll have to use Form 982 to report this transaction.
If you want to leave tax questions, we’ll try to get them answered. Thanks for listening!