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Thread: Tax Question - Other Income Line

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    Member hippie1981's Avatar
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    Default Tax Question - Other Income Line

    I went into H & R Block to get a rapid refund. I had already filled out all the forms including my self-employment stuff. Before deciding that it wasn't worth it to use them (wanted to charge me $75 and I was only getting $300 back), they mentioned that I could file my tip money on the other income line. Is this really possible? And what would I put as the type of income on the line? Tips? BTW I only have 900 in income from dancing last year.

    Lisa
    Three tomatoes are walking down the street...Papa Tomato, Mama Tomato, and Baby Tomato. Baby Tomato starts to lag behind so Papa Tomato goes back to Baby Tomato and squishes him, then says "KETCHUP!"

    Haha!
    (P.S. Please don't make me explain this to you.)

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    God/dess montythegeek's Avatar
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    Default Re:Tax Question - Other Income Line

    Go to page 61 of http://www.irs.gov/pub/irs-pdf/p17.pdf

    If I understand the instructions you have to file form 4137 if you did not report it to the employer and have social security withheld and enter the tax on line 56.

    Middle of column 2. Instructions are different if reported to employer, but this chapter covers the subject.

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    Veteran Member NVJosh's Avatar
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    Default Re:Tax Question - Other Income Line

    I've seen it done this way. You just report the entire tip income with no deductions on the other income line. You still have to include Schedule SE and you are subject to self-employment tax on the income. Is it correct? I dunno...my current software frowns on it, other tax software I've used allows it. I doubt you'd really be exposing yourself to any problems if you report the income and pay the tax correctly.

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    Default Re:Tax Question - Other Income Line

    I looked at this for ATF last year at tax time. NV JOSH is right that
    the present so called "sophisticaed" tax software doesn't like you using that line without more backup.

    If you have a simple tax return, screw the computers and just use a pencil, an eraser, and a calculator. Sometimes that works better in life. The key point is that you are reporting it as
    "other income" in that area of the 1040. There is no allowance in that section for any business expenses.

    Here's the bottom line. ATF stared dancing in the late middle of the year so only had a partial year of dancer income. Further she was a "part time" dancer usually 16 to 24 hours per week.

    She still wound up filling out the back up schedules but didn't declare any expenses as she had w-2 withholding and
    "earned wages" taxes from her day job. She had to catch up on social security tax owed and stuff like that.

    For part time dancers, who have other earned income from their "day job." with only a few months of dancer income in 2003 this might be your all purpose "punt."

    Also in my opinion this method is not a good solution for full time dancers with a full 12 months of dancer income during 2003 on a 40 hour week or more basis.

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    Member hrb0's Avatar
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    Default Re:Tax Question - Other Income Line

    Montythegeek is partially correct. Last year I personally filed over 1700 federal tax returns. Many of them for local dancers. To report tip income not reported to employer a 4137 form is the correct form to use. This would only apply if the club gives you a w-2. In Fort Worth, Texas most clubs do not give out any type of tax document. A few do give the dancers a 1099-misc. In the case of a 1099 or no documentation it is best to use schedule C. This is for people who are self-employed. By doing this you can write off all of your work related expenses without having to itemize. Don't give the government any more money than you have to they will only waste it. If you need other tax help you can e mail me at [email protected].

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    Member aznsfstripper21's Avatar
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    Default Re:Tax Question - Other Income Line

    this was my 1st year dancing and dejavu sent me a "misc income" paper for myself saying i made $1400 but i filed my taxes without putting any misc income..

    would the IRS come after me? i know some dancers that only work part time that do not file their taxes for misc income

    much love & respect aiko
    ..:: much love aiko::..

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    God/dess montythegeek's Avatar
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    Default Re:Tax Question - Other Income Line

    would the IRS come after me?
    Will they? Who knows.
    Could they? Absolutely, especially if the 1099misc was filed with the IRS.

    As a personal matter I would follow the approach of always treating a document given to the IRS as being something sitting in the pocket of the IRS auditor looking at you across the table. Since indy contractors are a growing phenomenon and the IRS is after every nickel they can get and they have the form and you are an easy enforcement target ==ask your self if the peace of mind is worth a couple of hundred bucks.

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    Member aznsfstripper21's Avatar
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    Default Re:Tax Question - Other Income Line

    should i file another form of tax form to let the IRS know that i forgot to put the amount in the misc income line?

    how would you do that? i have sent the papers already for federal and tax

    much love & respect aiko
    ..:: much love aiko::..

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    God/dess montythegeek's Avatar
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    Default Re:Tax Question - Other Income Line

    Per the IRS web site at
    http://www.irs.gov/newsroom/article/...108657,00.html
    Tax Tip 2003-72, April 11, 2003

    Oops! You’ve discovered an error after your tax return has been filed. What should you do? You may need to amend your return, according to the IRS.

    The IRS usually corrects math errors or requests missing forms (such as W-2s) or schedules. In these instances, do not amend your return. However, do file an amended return if any of the following were reported incorrectly:

    Your filing status
    Your total income
    Your deductions or credits
    Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040, 1040A, 1040EZ, or electronically-filed return. If you are filing to claim an additional refund, wait until you have received your original refund. You may cash that check while waiting for any additional refund. If you owe additional tax for 2002, you should file Form 1040X and pay the tax by April 15, 2003, to avoid any penalty and interest.

    Generally, to claim a refund, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.

    If the changes involve another schedule or form, attach it to the 1040X. If you are filing more than one amended return, be sure to mail each in a separate envelope to the IRS center for the area in which you live. The 1040X instructions list the addresses for the centers. You may download forms and publications or order them by calling toll free at 1-800-TAX-FORM (1-800-829-3676).

    Subscribe to Tax Tips!

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    Default Re:Tax Question - Other Income Line

    would the IRS come after me?

    Will they? Who knows.
    Could they? Absolutely, especially if the 1099misc was filed with the IRS.
    Please realize that the 1099-misc form which was sent to you by the club was also sent to the IRS and entered in their computers. The info on the 1099-misc form tells the IRS computers to expect $1,400 worth of miscellaneous income to be declared on a tax return bearing your name and your social security number. This will automatically be computer cross-checked as soon as the tax return you filed is also entered into the IRS computers.

    With a $1,400 amount involved, and with nothing at all appearing as income on your tax return under the same name as the club who filed the 1099, odds are VERY high that you will be audited. The reason for this is that it appears to the IRS that you are deliberately not reporting income. It would be different if you had claimed some amount of income under the same name as the club that filed the 1099, because that could be explained as a discrepancy of some sort. But by not declaring ANY income under the same name as the club that filed the 1099, it looks to the IRS like you're deliberately trying to hide income to avoid paying taxes.

    My advice would be to file an amended return ASAP, and hope that the IRS receives it before your case comes up on the audit list. Fortunately there are lots of people out there with much higher amounts of discrepancy than your $1,400 and these folks will undoubtedly get audited first. However, $1,400 is too significant of an amount for the IRS to overlook. Also, because you failed to report any income from this club, the IRS may also be wondering what other sources of income you might also have failed to report. Also, since you work in a profession where cash tips are a normal part of your income, like waiters or taxi drivers, the IRS will probably also expect you to have declared additional tip income over and above the amount stated on the 1099 filed by the club.

    I don't mean to scare you, but not reporting income on your tax return which has already been reported to the IRS via a 1099-misc form from an 'employer' with an amount in excess of $1000 can be used as positive proof of tax fraud by the IRS. This suspicion may prompt the IRS to request copies of all of your bank, credit card, investment, car loan, and other transactions so they can see how much money you saved or spent last year. If the total amount of money you deposited in your bank account, spent on your credit card etc. exceeds the amount of money you claimed as income on your tax return, the IRS may decide on a full blown investigation to find out where all of the extra money magically appeared from.

    Not to say that the IRS would attempt to press charges on top of collecting taxes on this unreported income, but they could. More likely the IRS would hit you with a sizeable fine in addition to having to pay additional income tax on the unreported income. You really don't want to be on the wrong side of the IRS because they can be a downright pain in the ass, so file that amended return ASAP !

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    Veteran Member NVJosh's Avatar
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    Default Re:Tax Question - Other Income Line

    Actually, while i agree with Monty and Melonie that you should file an amended return (and the sooner the better, penalties and interest will begin accruing for sure after April 15 and possibly before depending on last year's situation), you are not in any real danger of "positive proof of tax fraud" where $1,400 is concerned. You wouldn't even be in danger of being put in the "substantial understatement" category (which gives the IRS 6 years to audit you instead of 3) because of the small amount. However, if you ignore it, you will be subject to late payment penalties and interest, and the IRS will match it up at some point. Plus, if you file the amended return now, you will not pay tax on the entire $1,400, you will get to take deductions against it. If you wait for the IRS matching to notify you (and it will, eventually), it is much more likely that they would not allow you any deductions against the $1,400.

    Form 1040X is not that complex. You basically put what the original numbers are in one column, the change, and the correct numbers in a third column. On page 2 you give the reason for the amendment (whether it is the case or not, state that you received the 1099 after you filed your return...it makes it look more like an honest mistake). You'll also have to file a corrected Form 1040 and a new Schedule C with the return.

    If you don't feel comfortable doing the amended return on your own, feel free to pm me with questions, and/or I can recommend a couple of CPAs in the SF area.

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