Common mistakes when filing past due returns
Incorrectly Reporting 1099-MISC Income on Your Past Due Returns
A Form 1099-MISC is used to report payments made in the course of a trade or business to another person or business who is not an employee, also referred to as self-employed. The form is required, among other things, when payments of $600 or more in non-employee compensation, medical and health care payments, or rents are paid. This form is filed by the payer with the IRS and a copy is sent to the person or business receiving the payment. Unlike a W-2, there is no federal income tax, Social Security tax or Medicare tax withheld. The person or business receiving the payment is responsible for paying all taxes.
Self-employed individuals report their income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or you may qualify to use Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). You should also be aware of Form 1040, Schedule SE (PDF), Self-Employment Tax, which must be filed if net earnings from self-employment are $400 or more. This form is used to figure your Social Security and Medicare tax, which is based on your net self-employment income.
Not Reporting Capital Gains/Losses on Past Due Tax Returns
In general, if you had a capital gain or loss, including any capital gain distributions from sales of stock or bonds, you must complete Form 1040 and attach a Schedule D to your tax return. Refer to Publication 550, Investment Income and Expenses for more information.
Failing to File a Past Due Return for a Deceased Taxpayer
A personal representative (fiduciary) is responsible for filing certain tax returns for a person who has died, and for the decedent's estate. The personal representative may be required to file the final income tax return of the decedent and any returns not filed for preceding years, the income tax return for the estate, and the estate tax return.
The final return should have the word: "Deceased,” the decedent's name, and the date of death written across the top of the return. Generally, the person who is filing a return for a decedent and claiming a refund must file Form 1310 (PDF), Statement of Person Claiming Refund Due a Deceased Taxpayer, with the return. However, if you are a surviving spouse filing a joint return, or a court appointed or certified personal representative filing an original return for the decedent, you do not have to file Form 1310. Personal representatives must attach to the return a copy of the court certificate showing the appointment.
Not Providing Correct Social Security Numbers for All Dependents
Be sure that all dependents’ Social Security numbers (SSNs) and names match their Social Security identification cards. If the SSNs do not match, we will disallow the dependents and any related credits, but you will need to call the Social Security Administration at (800) 772-1213 to correct the mistake.
Failing to Sign Your Past Due Tax Return
All returns must be signed. If filing jointly, both taxpayers must sign.
Mailing Your Past Due Tax Return to Incorrect Address
Be sure to mail your past due tax return to the IRS address on your notice. Sending your return to another address will delay the processing of your return.
Omitting Spouse’s Income on a Jointly Filed Past Due Return
Income from both taxpayers must be included on the return. If you need income information, please call the IRS' toll-free number at (866) 681-4271.
Omitting the 10 Percent Early Distribution Tax on Qualified Retirement Plans
In general, any distribution from your IRA, other qualified retirement plan, or modified endowment contract before you reach age 59½ is an early distribution. In general, if you receive an early distribution (including an involuntary cash out) from an IRA, other qualified retirement plan, or modified endowment contract, the part of the distribution included in income generally is subject to an additional 10 percent tax.
Incorrectly Reporting Rollover Distributions
A rollover is a tax-free distribution of assets from one qualified retirement plan that is reinvested in another plan or the same plan. Generally, you must complete the rollover within 60 days of receiving the distribution. Any taxable amount not rolled over must be included in income and may be subject to the additional tax on early withdrawals.
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