Off Topic: Retired 16 years, yet…

[lz]

This I think you will love:
I got a dreaded computerized IRS letter today regarding my 2022 Form 1040, and immediately figured it was an underpayment penalty I owed.
Nope, some pinhead IRS clerk with nothing to do “caught” me. The last two years I’ve prepared our return by hand for simplicity and being a somewhat honest man, on page 1, line 8, I included $4 income. Aha, I failed to fill out a separate Schedule 1 explaining what the item was!
Common sense and materiality says the IRS should be happy the taxpayer reported the item, who cares what it was? Should be End of story, but hell no, spend money for employee labor, ink, stamp, depreciation of computer, etc, for that $4 item on which the tax has already been paid!
So, I looked through my receipts and found what it was…..an IRS credit, probably my overpayment on taxes last year, but no 1099 or other form provided to me for that amount. Ironic, huh?
So, now I’ve gone to the forms, found the proper Schedule and am going to show it on line z, Other income, and it will be my pleasure to explain what it is on that line! I hope somebody at the IRS feels stupid after receiving my mailed form, but somehow, I doubt it! I’ll be out a stamp for somebody’s foolish nitpicking.

 

[lz]

BTW, I have no hate for the IRS, used to prepare taxes as a CPA before burning out on them as a little guy Accountant on the side.

 

[BrandonJones]

… enjoy the rest of your retirement. Lol.

 

[JrandoUK]

This I think you will love:
I got a dreaded computerized IRS letter today regarding my 2022 Form 1040, and immediately figured it was an underpayment penalty I owed.
Nope, some pinhead IRS clerk with nothing to do “caught” me. The last two years I’ve prepared our return by hand for simplicity and being a somewhat honest man, on page 1, line 8, I included $4 income. Aha, I failed to fill out a separate Schedule 1 explaining what the item was!
Common sense and materiality says the IRS should be happy the taxpayer reported the item, who cares what it was? Should be End of story, but hell no, spend money for employee labor, ink, stamp, depreciation of computer, etc, for that $4 item on which the tax has already been paid!
So, I looked through my receipts and found what it was…..an IRS credit, probably my overpayment on taxes last year, but no 1099 or other form provided to me for that amount. Ironic, huh?
So, now I’ve gone to the forms, found the proper Schedule and am going to show it on line z, Other income, and it will be my pleasure to explain what it is on that line! I hope somebody at the IRS feels stupid after receiving my mailed form, but somehow, I doubt it! I’ll be out a stamp for somebody’s foolish nitpicking.

Interesting, and there are thousands of rich ones paying lawyers big money to get out of taxes etc….

 

[rbs]

Sounds like the employee went thru the checklist, couldn't check the box on the list, and sent the request. I would guess that there isn't an IRS policy that provides for a de minimis exclusion ... and there you have it. In the last decade, I was audited 3 different years ... charitable gifts.

 

[gracetoyou]

This I think you will love:
I got a dreaded computerized IRS letter today regarding my 2022 Form 1040, and immediately figured it was an underpayment penalty I owed.
Nope, some pinhead IRS clerk with nothing to do “caught” me. The last two years I’ve prepared our return by hand for simplicity and being a somewhat honest man, on page 1, line 8, I included $4 income. Aha, I failed to fill out a separate Schedule 1 explaining what the item was!
Common sense and materiality says the IRS should be happy the taxpayer reported the item, who cares what it was? Should be End of story, but hell no, spend money for employee labor, ink, stamp, depreciation of computer, etc, for that $4 item on which the tax has already been paid!
So, I looked through my receipts and found what it was…..an IRS credit, probably my overpayment on taxes last year, but no 1099 or other form provided to me for that amount. Ironic, huh?
So, now I’ve gone to the forms, found the proper Schedule and am going to show it on line z, Other income, and it will be my pleasure to explain what it is on that line! I hope somebody at the IRS feels stupid after receiving my mailed form, but somehow, I doubt it! I’ll be out a stamp for somebody’s foolish nitpicking.

Great to have thousands of more IRS agents now to do stupid stuff like that.

 

[OH_catfan]

Sir, this is a Wendy's

 

[Old Jim]

Great to have thousands of more IRS agents now to do stupid stuff like that.

They'll probably show up at LZ's house early some morning with 20 armed FBI agents!

 

[WTF Cat]

This I think you will love:
I got a dreaded computerized IRS letter today regarding my 2022 Form 1040, and immediately figured it was an underpayment penalty I owed.
Nope, some pinhead IRS clerk with nothing to do “caught” me. The last two years I’ve prepared our return by hand for simplicity and being a somewhat honest man, on page 1, line 8, I included $4 income. Aha, I failed to fill out a separate Schedule 1 explaining what the item was!
Common sense and materiality says the IRS should be happy the taxpayer reported the item, who cares what it was? Should be End of story, but hell no, spend money for employee labor, ink, stamp, depreciation of computer, etc, for that $4 item on which the tax has already been paid!
So, I looked through my receipts and found what it was…..an IRS credit, probably my overpayment on taxes last year, but no 1099 or other form provided to me for that amount. Ironic, huh?
So, now I’ve gone to the forms, found the proper Schedule and am going to show it on line z, Other income, and it will be my pleasure to explain what it is on that line! I hope somebody at the IRS feels stupid after receiving my mailed form, but somehow, I doubt it! I’ll be out a stamp for somebody’s foolish nitpicking.

You mistake was assuming common sense would be used... by the fedl govt.

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH

 

[jrm693]

This I think you will love:
I got a dreaded computerized IRS letter today regarding my 2022 Form 1040, and immediately figured it was an underpayment penalty I owed.
Nope, some pinhead IRS clerk with nothing to do “caught” me. The last two years I’ve prepared our return by hand for simplicity and being a somewhat honest man, on page 1, line 8, I included $4 income. Aha, I failed to fill out a separate Schedule 1 explaining what the item was!
Common sense and materiality says the IRS should be happy the taxpayer reported the item, who cares what it was? Should be End of story, but hell no, spend money for employee labor, ink, stamp, depreciation of computer, etc, for that $4 item on which the tax has already been paid!
So, I looked through my receipts and found what it was…..an IRS credit, probably my overpayment on taxes last year, but no 1099 or other form provided to me for that amount. Ironic, huh?
So, now I’ve gone to the forms, found the proper Schedule and am going to show it on line z, Other income, and it will be my pleasure to explain what it is on that line! I hope somebody at the IRS feels stupid after receiving my mailed form, but somehow, I doubt it! I’ll be out a stamp for somebody’s foolish nitpicking.

Just when we thought they were not efficient!! Thanks for being a honest person this country needs more like you!! I only wish our elected or non elected whatever the case may be were that honest.

 

[lz]

You mistake was assuming common sense would be used... by the fedl govt.

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH

Well, I figured I better not omit an income item from the IRS! Then, as Jim said, an arrest warrant may have come with armed agents!

 

[lz]

The small amount items drive a taxpayer even crazier. My wife once had a business we closed, the IRS insisted she still owed an immaterial amount for payroll taxes. I double and triple checked the payroll returns, sent a couple of detailed letters, finally realized I was arguing with a computer that couldn’t adjust. I gave up, finally. A similar thing happened to me in the 1970s with a bank account I closed in another state when I returned to grad school at Murray. I was right, but wrong to continue the fight, though I needed every penny.

 

[Deeeefense]

Our tax systems is ridiculous. I remember back when President Reagan in a State of the Union address chastised congress for not doing something about the bloated tax code which was then 30,000 pages. It's now 70,000+. Even the IRS doesn't know everything about it. Questions addressed to the IRS are frequently answered incorrectly.

But I don't really blame the IRS, the real culprit is Congress over the decades that has failed to come up with serious tax simplification efforts. Instead they just keep adding more bill, exceptions, exclusions, etc. The IRS didn't create this mess they are just stuck with trying to administer it.

 

[Ben101er]

Well, I figured I better not omit an income item from the IRS! Then, as Jim said, an arrest warrant may have come with armed agents!

Yeah, but obviously they had not kept track of it.

 

[TeoJ]

Their probably trying to find the millions you have hidden in foreign accounts.

 

[*Bleedingblue*]

This I think you will love:
I got a dreaded computerized IRS letter today regarding my 2022 Form 1040, and immediately figured it was an underpayment penalty I owed.
Nope, some pinhead IRS clerk with nothing to do “caught” me. The last two years I’ve prepared our return by hand for simplicity and being a somewhat honest man, on page 1, line 8, I included $4 income. Aha, I failed to fill out a separate Schedule 1 explaining what the item was!
Common sense and materiality says the IRS should be happy the taxpayer reported the item, who cares what it was? Should be End of story, but hell no, spend money for employee labor, ink, stamp, depreciation of computer, etc, for that $4 item on which the tax has already been paid!
So, I looked through my receipts and found what it was…..an IRS credit, probably my overpayment on taxes last year, but no 1099 or other form provided to me for that amount. Ironic, huh?
So, now I’ve gone to the forms, found the proper Schedule and am going to show it on line z, Other income, and it will be my pleasure to explain what it is on that line! I hope somebody at the IRS feels stupid after receiving my mailed form, but somehow, I doubt it! I’ll be out a stamp for somebody’s foolish nitpicking.

Well the federal government has added 1 trillion to the debt in just the last 30 days so I guess the money spent doing this is just a fart in a hurricane

 

[*Bleedingblue*]

Our tax systems is ridiculous. I remember back when President Reagan in a State of the Union address chastised congress for not doing something about the bloated tax code which was then 30,000 pages. It's now 70,000+. Even the IRS doesn't know everything about it. Questions addressed to the IRS are frequently answered incorrectly.

But I don't really blame the IRS, the real culprit is Congress over the decades that has failed to come up with serious tax simplification efforts. Instead they just keep adding more bill, exceptions, exclusions, etc. The IRS didn't create this mess they are just stuck with trying to administer it.

That's all because of the illegitimate nature of our government. We were not meant to pay taxes by the founders or have a foreign entity running our currency. We have been conquered since 1913

 

[TheThack]

This I think you will love:
I got a dreaded computerized IRS letter today regarding my 2022 Form 1040, and immediately figured it was an underpayment penalty I owed.
Nope, some pinhead IRS clerk with nothing to do “caught” me. The last two years I’ve prepared our return by hand for simplicity and being a somewhat honest man, on page 1, line 8, I included $4 income. Aha, I failed to fill out a separate Schedule 1 explaining what the item was!
Common sense and materiality says the IRS should be happy the taxpayer reported the item, who cares what it was? Should be End of story, but hell no, spend money for employee labor, ink, stamp, depreciation of computer, etc, for that $4 item on which the tax has already been paid!
So, I looked through my receipts and found what it was…..an IRS credit, probably my overpayment on taxes last year, but no 1099 or other form provided to me for that amount. Ironic, huh?
So, now I’ve gone to the forms, found the proper Schedule and am going to show it on line z, Other income, and it will be my pleasure to explain what it is on that line! I hope somebody at the IRS feels stupid after receiving my mailed form, but somehow, I doubt it! I’ll be out a stamp for somebody’s foolish nitpicking.

Now you know why they need an extra 80,000 IRS agents! And I used to be one.... took me less than six weeks to see the error of my ways on that decision! LOL

Great story exposing the bureaucracy.

 

[lz]

Yeah, but obviously they had not kept track of it.

The IRS letter explained how their tax software would have led me to use the proper form. Hogwash, I’ve used various tax software programs over the years, and the IRS software is not simple at all. I used Taxcut for years, now its cost is ridiculous for a simple return. I feel for people with little tax knowledge, people of low means I used to charge $50 are now paying $300 for simple returns.

 

[Yellow Man]

Like a lot of things in our country.... It may not be perfect, but it beats the daylights out of most anything else... Now if we could just get everyone to pay their fair share....

 

[lz]

Like a lot of things in our country.... It may not be perfect, but it beats the daylights out of most anything else... Now if we could just get everyone to pay their fair share....

Too many don’t want to pay their fair share of anything, including a nice subdivision where I live with no Association dues. About 40% of us pay for the maintenance of 4 entrances. I put on blinders, write my yearly check.

 

[Supafuzz75]

Fuuuuuq the IRS.. Last time i filed was 2017 i think.. Bunch thieves..

 

[IDcatfan]

Like a lot of things in our country.... It may not be perfect, but it beats the daylights out of most anything else... Now if we could just get everyone to pay their fair share....

Or if we could get half the population to pay anything at all…

 

[grousehunter66]

This I think you will love:
I got a dreaded computerized IRS letter today regarding my 2022 Form 1040, and immediately figured it was an underpayment penalty I owed.
Nope, some pinhead IRS clerk with nothing to do “caught” me. The last two years I’ve prepared our return by hand for simplicity and being a somewhat honest man, on page 1, line 8, I included $4 income. Aha, I failed to fill out a separate Schedule 1 explaining what the item was!
Common sense and materiality says the IRS should be happy the taxpayer reported the item, who cares what it was? Should be End of story, but hell no, spend money for employee labor, ink, stamp, depreciation of computer, etc, for that $4 item on which the tax has already been paid!
So, I looked through my receipts and found what it was…..an IRS credit, probably my overpayment on taxes last year, but no 1099 or other form provided to me for that amount. Ironic, huh?
So, now I’ve gone to the forms, found the proper Schedule and am going to show it on line z, Other income, and it will be my pleasure to explain what it is on that line! I hope somebody at the IRS feels stupid after receiving my mailed form, but somehow, I doubt it! I’ll be out a stamp for somebody’s foolish nitpicking.

Why would you report an IRS credit as income? IRS does not provide 1099’s. Most frustrating group I have ever dealt with. They don’t understand their own tax code. Sounds like you might have reported it on the wrong line anyhow and should have just shown up on your return under payments and credits already made against current year tax liability.

Been dealing with the IRS for years in my professional life and I have never heard of them reaching out over something as trivial as a $4. First time for everything I reckon. Good luck dealing with them. Hope you get everything cleared up.

Screw with them and file an amended return online and keep claiming the $4 credit until they get it cleared up.lol

On another note, been using turbo tax for several years since I left that part of my professional life and I find it pretty user friendly. I have used several others, but I like turbo tax the best.

 

[BBUK]

They'll probably show up at LZ's house early some morning with 20 armed IRS agents!

fify

 

[lz]

Why would you report an IRS credit as income? IRS does not provide 1099’s. Most frustrating group I have ever dealt with. They don’t understand their own tax code. Sounds like you might have reported it on the wrong line anyhow and should have just shown up on your return under payments and credits already made against current year tax liability.

Been dealing with the IRS for years in my professional life and I have never heard of them reaching out over something as trivial as a $4. First time for everything I reckon. Good luck dealing with them. Hope you get everything cleared up.

Screw with them and file an amended return online and keep claiming the $4 credit until they get it cleared up.lol

On another note, been using turbo tax for several years since I left that part of my professional life and I find it pretty user friendly. I have used several others, but I like turbo tax the best.

If I take the trouble to manually prepare my return and discover an IRS credit in my accumulated info, I figure they will catch it if I don’t report it. Any direction I might have gone, I likely still would have had the red tape. No, they spelled out they did not want a 1040X, nothing was owed by me. I’ve dealt with them off and on since working as a Staff Accountant for a CPA firm 1974-76. Yes, the $4 amount shocked me, too, there’s that favorite Accounting word Materiality being violated. So, I did what they desired, as I explained above, had to send a cover letter, will mail it to their Austin, Tx, office as requested, then will wash my hands of it.

 

[grousehunter66]

If I take the trouble to manually prepare my return and discover an IRS credit in my accumulated info, I figure they will catch it if I don’t report it. Any direction I might have gone, I likely still would have had the red tape. No, they spelled out they did not want a 1040X, nothing was owed by me. I’ve dealt with them off and on since working as a Staff Accountant for a CPA firm 1974-76. Yes, the $4 amount shocked me, too, there’s that favorite Accounting word Materiality being violated. So, I did what they desired, as I explained above, had to send a cover letter, will mail it to their Austin, Tx, office as requested, then will wash my hands of it.

Okay. Based on what you described, it still sounds like they owe you $4.lol. A credit is not income, but hey you depended on them to catch it. That was your first mistake.lol. Good luck. Sounds like you have it under control and doing what you can.

 

[Get Bucket$]

If I take the trouble to manually prepare my return and discover an IRS credit in my accumulated info, I figure they will catch it if I don’t report it. Any direction I might have gone, I likely still would have had the red tape. No, they spelled out they did not want a 1040X, nothing was owed by me. I’ve dealt with them off and on since working as a Staff Accountant for a CPA firm 1974-76. Yes, the $4 amount shocked me, too, there’s that favorite Accounting word Materiality being violated. So, I did what they desired, as I explained above, had to send a cover letter, will mail it to their Austin, Tx, office as requested, then will wash my hands of it.

A refund of overpayment of taxes isn’t taxable, why would you report it?

 

[lz]

A refund of overpayment of taxes isn’t taxable, why would you report it?

No, it showed as a credit against estimated tax payments, trust me, it was taxable.

 

[Get Bucket$]

No, it showed as a credit against estimated tax payments, trust me, it was taxable.

How so?

 

[lz]

How so?

I apparently didn’t print the notification, I have 30 years of tax experience. No big deal, probably shouldn’t have been honest and reported it since it was “somewhat” hidden.

 

[Get Bucket$]

I apparently didn’t print the notification, I have 30 years of tax experience. No big deal, probably shouldn’t have been honest and reported it since it was “somewhat” hidden.

I’m with you on experience and background just confused on what created the taxable event. Anything related to overpayment/underpayment wouldn’t create a taxable event (outside of interest income) at the federal level at least. Maybe I’m misunderstanding the facts.

 

[lz]

I’m with you on experience and background just confused on what created the taxable event. Anything related to overpayment/underpayment wouldn’t create a taxable event (outside of interest income) at the federal level at least. Maybe I’m misunderstanding the facts.

Hard to explain without the credit against my taxes owed printed (could have been toward the previous year, can’t remember).

 

[jameslee32]

Just become a billionaire lz. 😊

 

[lz]

Just become a billionaire lz. 😊

Waiting on your stock picks, my astute friend!

 

[Caveman Catfan]

Sounds like the employee went thru the checklist, couldn't check the box on the list, and sent the request. I would guess that there isn't an IRS policy that provides for a de minimis exclusion ... and there you have it. In the last decade, I was audited 3 different years ... charitable gifts.

Yeah, it’s possible that the agent also bemoaned the fact that there was required follow-up, but the protocol demanded it.

 

[lz]

I’m with you on experience and background just confused on what created the taxable event. Anything related to overpayment/underpayment wouldn’t create a taxable event (outside of interest income) at the federal level at least. Maybe I’m misunderstanding the facts.

GB, I looked through my 2022 tax file one last time, and all I wrote to myself was dated Oct, 2022-Dept of Treasury, Interest Income, $4. So, the amount was so small, I received nothing at Y/E, but reported it anyway, albeit on the wrong line, and either an agent or their computer wanted it on the proper line. Back in the day, Misc income or expense for small amounts was accepted by the IRS with no more questions asked. I suppose Materiality means nothing anymore.
That’s all, I have no more, believe that petty event is behind me.

 

[railsplitter67]

GB, I looked through my 2022 tax file one last time, and all I wrote to myself was dated Oct, 2022-Dept of Treasury, Interest Income, $4. So, the amount was so small, I received nothing at Y/E, but reported it anyway, albeit on the wrong line, and either an agent or their computer wanted it on the proper line. Back in the day, Misc income or expense for small amounts was accepted by the IRS with no more questions asked. I suppose Materiality means nothing anymore.
That’s all, I have no more, believe that petty event is behind me.

You would think there would be a common sense line where it isnt worth the paperwork. I am self employed and one yr they somehow determined I owed them an amount less than the postage it cost to send me the notice.

 

[bigblueinsanity]

This I think you will love:
I got a dreaded computerized IRS letter today regarding my 2022 Form 1040, and immediately figured it was an underpayment penalty I owed.
Nope, some pinhead IRS clerk with nothing to do “caught” me. The last two years I’ve prepared our return by hand for simplicity and being a somewhat honest man, on page 1, line 8, I included $4 income. Aha, I failed to fill out a separate Schedule 1 explaining what the item was!
Common sense and materiality says the IRS should be happy the taxpayer reported the item, who cares what it was? Should be End of story, but hell no, spend money for employee labor, ink, stamp, depreciation of computer, etc, for that $4 item on which the tax has already been paid!
So, I looked through my receipts and found what it was…..an IRS credit, probably my overpayment on taxes last year, but no 1099 or other form provided to me for that amount. Ironic, huh?
So, now I’ve gone to the forms, found the proper Schedule and am going to show it on line z, Other income, and it will be my pleasure to explain what it is on that line! I hope somebody at the IRS feels stupid after receiving my mailed form, but somehow, I doubt it! I’ll be out a stamp for somebody’s foolish nitpicking.

Sounds like the employee went thru the checklist, couldn't check the box on the list, and sent the request. I would guess that there isn't an IRS policy that provides for a de minimis exclusion ... and there you have it. In the last decade, I was audited 3 different years ... charitable gifts.

Really it was probably an entirely automated process with very little human decision making involved. The system recognized an amount in the line with no accompanying schedule and flagged it. In the past this meant a human looked at it. Today it almost certainly meant a form letter was automatically generated without a human even knowing. The first human interaction was in the mail room when the envelope was either stuffed or packed to go out.

This certainly isn't taking up for the irs, because they're the worst, but I think it important people understand how automated things are in today's big business/government sphere.

That's also why the 80,000 additional hires was complete nonsense. It's completely unnecessary bloat since most of this stuff is automated. Just my suspicion but they were hired for two reasons: 1) to pursue p2p cash transfers using apps like Venmo and 2) a reason best discussed in another thread.

Finally as a another poster aptly stated, the IRS agents/reps themselves have no idea how to consistently interpret their ever growing sea of incomprehensible regs. Call 10 people (after waiting an hour in hold) and you will get 10 different answers.

The whole agency needs torn to the ground and rebuilt. Preferably just torn down but that's another discussion

 

[lz]

True, but whoever programmed today’s IRS software is a wasteful thinker, as is that person’s boss(es).