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I received a letter in the mail from the IRS.
It seems they want more money from me. I can only assume that it is related to April Fool's Day.
This stems from the taxation of my inflation protected treasuries and what happened when deflation struck during 2009's tax year.
Here's the amusing part, if you can call any of this amusing.
For the first third of 2009 four of my bonds existed in Legacy Treasury Direct. I then transferred them to Treasury Direct. I did this to simplify and consolidate my holdings.
While in Legacy Treasury Direct they racked up about $11,000 in deflationary losses. I have a 1099-OID from Legacy Treasury Direct showing that. For the rest of the year those very same bonds sat in Treasury Direct. They then racked up about $10,000 in inflationary gains. I have a separate 1099-OID from Treasury Direct showing that.
Now the IRS is claiming that I owe taxes on the $10,000 in inflationary gains even though those bonds actually deflated by roughly $1,000 that year.
So how did the IRS come up with the math for my new tax total? Easy. They simply ignored all the OIDs with negative numbers. Genius!
My tax preparer said it will get resolved. No worries. Why is it that I always tend to worry more when I'm told not to worry? I also tend to worry more when people say they need to use special care when writing explanation letters. Let's just say there was a certain "don't poke the bear" quality to her words. And you know what really makes me worry? I would say that seeing a nice thick letter from the IRS would definitely be near the top of the list.
Fortunately, I make every effort to accurately report my taxes. The information is all there. In theory, it should therefore be a relatively easy fix. I won't know for a month though. This is tax season so my tax preparer is really busy right now.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
17 hours ago
5 comments:
Since "Don't worry" turns out not to be helpful, I'll just say, "Don't panic."
Don't mess with the tax man! I hope it gets fixed. My accountant told me today we moved up an income barcket after my SLV trade last year! Excuse me for making cash, please take more. Unreal.
Anarchy!
Don't Tell Me What to Do!
I am inspired by tonight's comments.
My old catch phrase was...
"If one must panic, at least panic first."
My new catch phrase is...
"If one must not worry, at least not worry first."
Hahaha! :)
A letter is nothing to worry about, and a letter back from your preparer with supporting docs is usually all it takes. I've had that happen a couple of times and received a nice letter back from the IRS saying we were good.
Now, I had a much more frightening thing happen last year. I came home from work to find a little white card stuffed in my door. It was from an IRS agent who stopped by to "talk" to me. He left his work and cell phone number and asked that I contact him immediately.
At first, I thought it was a joke. Then, I looked up the form number on the card in it was legit. So, I didn't sleep well that night. The next day, I called a tax attorney who said he would conference call the agent with me. We called him and he wanted information -- on my next door neighbor!!!
I didn't have what he was looking for so he thanked me and that was that. I got a tax attorney out of it and he did my taxes this year. BTW, a personal contact like that usually means they want $15k or more from you.
My neighbor sold his house in a short sale and disappeared.
Every time I have dealt with the IRS, they have been professional and fair. I expect they will treat you the same. :)
Mr Slippery,
Thanks for taking the time to write that.
It certainly helps calm my concerns. :)
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