Taxes 2022: 7 On Your Side, experts answer viewer questions during Tax Chat

SAN FRANCISCO (KGO) -- Have a question about filing your tax returns? 7 On Your Side's Michael Finney is here to help.

On Friday, 7 On Your Side, along with a team of tax experts from United Way Bay Area, answered your questions about changes to the tax law, new deductions and deadlines, and more.

United Way Bay Area's Free Tax Help can get your taxes done right by one of their experts for free! You may qualify for more than $8,000 in refunds and earned income tax credits.

Call 211 or visit UWBA.org/taxhelp to get started today.

Take a look at more stories by Michael Finney and 7 On Your Side.

ASKED AND ANSWERED:

Viewer name: Kris

Viewer question: What to do if you're having problems filing taxes because the IRS says you're deceased?

Volunteer name: Norman M. Golden, EA

Answer: A number of taxpayers have reported the same problem. The IRS matches records with the Social Security Administration. I would go to the local SSA office with adequate identifcation to prove you are still alive.

Viewer name: Eelee

Viewer question: What to do if the CA Tax Board is charging me for medical insurance I didn't pay for, and is ignoring my replies?

Volunteer name: Norman M. Golden, EA

Answer: Federal law eliminated the penalty for not having medical insurance, however the State of California is still doing it. The FTB must think you don't have health insurance and are accessing the penalty. If you have health insurance, then call the FTB; be prepared for a long wait. If you don't have health insurance, then you will be subject to the penalty.

Viewer name: Christine

Viewer question: What to do if my accounting firm has not filed my personal taxes for 2019 even though I paid them in full?

Volunteer name: Norman M. Golden, EA

Answer: I would contact the firm and ask them why they haven't filed your return. Ask them if they want you to file a Form 14157 with the IRS. That's a complaint form; I think they will file your return.

Viewer name: Robert

Viewer question: What are the tax implications for me if someone fraudulently claimed EDD under my name?

Volunteer name: Amanda Boston, EA

Answer: There ultimately should be no tax implications to you. You need to report it to EDD immediately. You may have to file your return by paper with an explanation attached explaining that you did not receive the EDD payments and that you were a victim of identity theft. https://www.IRS.gov/identity-theft-central for the IRS identity theft reporting and here is the link for the FTB https://www.ftb.ca.gov/help/scams/identity-theft.html

You will want to watch all of your accounts to be sure there is no further fraud.

Viewer name: Greta

Viewer question: Why has the IRS taken so long to complete its investigation into my stolen tax refund?

Volunteer name: Amanda Boston, Ea

Answer: The IRS is behind by at minimum 9 months due to COVID, lack of funding and Congress making the IRS send out all the stimulus payments and advance child tax credits without additional staffing or funding. If you have not already, be sure to file a police report if it was stolen from your mail. If it was a case of identity theft here are some helpful links: https://www.IRS.gov/identity-theft-central for the IRS identity theft reporting and here is the link for the FTB https://www.ftb.ca.gov/help/scams/identity-theft.html

You will want to watch all of your accounts to be sure there is no further fraud.

Viewer name: Ronald

Viewer question: What to do when the IRS won't refund my 2018 amended tax return?

Volunteer name: Norman M. Golden, EA

Answer: The IRS is terribly understaffed and can't keep up with the workload. I had a client who finally last June got his refund from an originally filed 2018 Form 1040. You could call the IRS, but be prepared for a long wait.

Viewer name: Pamela

Viewer question: What to do when my 2019 tax refund is delayed?

Volunteer name: Norman M. Golden, EA

Answer: The IRS is terribly understaffed and can't keep up with the workload. I had a client who finally last June got his refund from an originally filed 2018 Form 1040. You could call the IRS, but be prepared for a long wait.

Viewer name: Shannon

Viewer question: Should I file taxes for 2021 even if I haven't received my 2020 tax return?

Volunteer name: Amanda Boston, EA

Answer: Yes, I assume you mean that you have filed and not received the refund yet. You should file 2021 so that you do not fall behind. Each year stands alone.

Viewer name: Richard

Viewer question: How do taxes affect any lottery winnings?

Volunteer name: Norman M. Golden, EA

Answer: If you are asking how they are taxed, lottery winnings need to be fully reported on your Federal Form 1040. California, however, does not tax lottery winnings.

Viewer name: Carlyn

Viewer question: Why haven't I received the Franchise Tax Board California Stimulus Payment

Volunteer name: Amanda Boston, EA

Answer: It could be that your income is above the threshold. Here is a link to see if you qualify: https://www.ftb.ca.gov/about-ftb/newsroom/golden-state-stimulus/gss-ii.html

Viewer name: Mar

Viewer question: How to recover money that was lost when you were mistakenly overpaying your taxes for years?

Volunteer name: KK Surugucchi, UWBA

Answer: You will need to file amended tax returns. However, there is a three year limit to claim any refunds. For instance, in 2022 you can only file amended returns up to tax year 2018. Any overpayments made for tax years 2017 or earlier are lost

Viewer name: Matthew

Viewer question: Is the settlement from the Fire Victims Trust taxable income?

Volunteer name: Amanda Boston, EA

Answer: This is a tough one - it all depends on why you received the income. If it was for injury then no, it could be taxable for other losses. I would need more information to be able to accurately answer your question.

Viewer name: William

Viewer question: How to get CA Golden State Stimulus II?

Volunteer name: KK Surugucchi, UWBA

Answer: You should have filed a 2020 tax return by October 2021. If you did so, and still didn't receive GSS II, there is a number to call. You can find it on the FTB's CA GSS II page.

https://www.ftb.ca.gov/about-ftb/newsroom/golden-state-stimulus/help.html#Contact-us-about-the-Golden-State-Stimulus

Viewer name: Jeff

Viewer question: What to do when you are unable to access the 540 form on the website to complete your taxes?

Volunteer name: Amanda Boston, EA

Answer: You can file online here: https://www.ftb.ca.gov/file/ways-to-file/online/calfile/index.asp it is free. The Franchise Tax Board prefers that you file online and no longer wants paper filled out forms.

Viewer name: Lynette

Viewer question: What to do when you missed the unemployment tax break granted in 2020?

Volunteer name: Alexander Ho, United Way Bay Area

Answer: Hi Lynette, in tax year 2020 there was a 10,200 exemption of income from unemployment. This was due to the fact that unemployment benefits were significantly expanded for a few months during that year. Unfortunately, that income exemption was only for one year, and in tax year 2021, all unemployment benefits are added to gross income like in normal years.

Viewer name: Susan

Viewer question: How to fix the mistake on the Franchsie Tax Board when it includes tax credit software from 2021

Volunteer name: Amanda Boston, EA

Answer: I do not understand the question - what is tax credit software?

Viewer name: Lois

Viewer question: What to do if the IRS lost my tax return?

Volunteer name: Amanda Boston, EA

Answer: I would call the IRS and advise that you would like to send a duplicate copy of your return and ask how and where would they want you to send it. You should mark DUPLICATE in BOLD ink at the top of the return. Without proof that they lost it there will be no penalty or interest relief if you owed Money. When you call - be ready for long hold times... plan for 3 hours.

Viewer name: Nancy

Viewer question: How to get a refund from H & R block for a tax penalty?

Volunteer name: Norman M. Golden, EA

Answer: It really depends on the nature of the penalty. Could you repost and state what penalty you were assessed and why you think it is Block's fault?

Viewer name: Norman

Viewer question: If our tax person did not e-file our taxes for 2020, can that affect when we receive our stimulus check?

Volunteer name: KK Surugucchi, UWBA

Answer: That will be unlikely. Most stimulus payments were keyed off the 2019 tax return. However, if you didn't receive the third stimulus payment of $1400 per person, you can claim it on your 2021 tax return.

Viewer name: Emma

Viewer question: How to deal with property taxes for out-of-state properties?

Volunteer name: Norman M. Golden, EA

Answer: Could you explain what to mean by "deal with"?

Viewer name: Saadullah

Viewer question: What to do when the IRS sends you an incorrect 1099 form?

Volunteer name: Larry Pon, CPA, EA

Answer: 1099s are issued by the payers such as banks, investment firms, and other payers. The only 1099 issued by the IRS would be the 1099-INT for interest paid by the IRS. If you think the 1099 is incorrect, contact the payer and show proof that you disagree..

Viewer name: Annalu

Viewer question: How to get refund for taxes paid in March 2020?

Volunteer name: Amanda Boston, EA

Answer: File a return or an amended return

Viewer name: Barney

Viewer question: How are your taxes affected if your social security is compromised?

Volunteer name: Amanda Boston, EA

Answer: You should report identity theft. Here are some helpful links: https://www.IRS.gov/identity-theft-central for the IRS identity theft reporting and here is the link for the FTB https://www.ftb.ca.gov/help/scams/identity-theft.html

You will want to watch all of your accounts to be sure there is no further fraud.

Viewer name: Steven

Viewer question: How do I receive my Golden State Stimulus $600 check?

Volunteer name: KK Surugucchi, UWBA

Answer: Technically, it is too late to do anything about it. You should have filed your 2020 tax return by October 15, 2021.

Viewer name: Elizabeth

Viewer question: What do I do when my tax preparer puts the wrong bank account information on my tax return?

Volunteer name: Norman M. Golden, EA

Answer: If the return has not yet been filed, then have the preparer correct it before electronically filing the returns. If the returns have already been filed, then the preparer should contact the IRS and FTB.

Viewer name: Theres

Viewer question: How to find out which grocery store items are taxable?

Volunteer name: Amanda Boston, EA

Answer: This is a sales tax question. Most grocery items are not subject to sales tax, however hot foods, liquor, soda, cigarettes and snacks are subject to sales tax. Here is a link with a full list https://www.cdtfa.ca.gov/industry/grocery.htm#Topics

Viewer name: Stanley

Viewer question: How does being in the COVID relief program affect me when I file taxes?

Volunteer name: Amanda Boston, EA

Answer: If you are a landlord you must pay tax on the rental income. If you are a renter the amount you received is not included in your gross income.

Viewer name: Pamela

Viewer question: What to do when the IRS won't come to a settlement over overdue taxes?

Volunteer name: Amanda Boston, EA

Answer: You can take them to tax court. You only have a limited amount of time and you should have a tax lawyer on your side. Otherwise you will need to pay. There are payment plans available with IRS.

Viewer name: Celia

Viewer question: Why haven't I yet received my tax ID number?

Volunteer name: Norman M. Golden, EA

Answer: You can obtain an IRS EIN (Employer Identification Number) online in minutes at www.IRS.gov. The best way is to Google "Form SS-4 online", however, make sure you don't click an "Ad", because those are commercial sites and they charge; the IRS site is free.

Viewer name: Rachel

Viewer question: What to do when Turbo Tax won't send you a spend card because your address is listed incorrectly?

Volunteer name: Amanda Boston, EA

Answer: Contact Turbo Tax with the issue.

Viewer name: Sylvia

Viewer question: Do our taxes cover $11,000 sidewalk work that my husband and I have been saddled with?

Volunteer name: Norman M. Golden, EA

Answer: No.

Viewer name: Ashley

Viewer question: What to do when my tax attorney disappears with all of my returns?

Volunteer name: Norman M. Golden, EA

Answer: Contact the State Bar of California (www.calbar.ca.gov)

Viewer name: Bruce

Viewer question: Kids wrongly received deceased mother's SEP IRA. Weren't complete on options offered as far as redemption and misapplication of state taxes. Bank of America won't fix the tax form request. What do I do?

Volunteer name: Larry Pon, CPA, EA

Answer: The IRA custodian is obligated to distribute the deceased person's retirement account based upon the Named Beneficiaries. However, it is up to the beneficiaries to tell the financial institution how much to withhold for federal and state taxes. Also, when you inherit your mother's SEP IRA, you have 10 years to distribute the SEP IRA. It would be difficult to undo anything that has been already done. If this was in the past 60 days, you may be able to put the money back into the SEP IRA to avoid getting taxed.

Viewer name: Crystal

Viewer question: Am I still entitled to American Rescue Plan Act?

Volunteer name: Larry Pon, CPA, EA

Answer: The American Rescue Plan was a $1.9 trillion bill that was passed in March, 2021. There were many tax provisions in this law. The tax changes include the Enhanced Child Tax Credit, Enhanced Dependent and Child Tax Credit, etc. As you prepare your 2021 tax return, make sure you take advantage of these changes. Take a look at the What's New section of the 1040 Instructions and IRS Publication 17.

Viewer name: Jerry

Viewer question: When will I receive my IRS tax refund from 2020?

Volunteer name: KK Surugucchi, UWBA

Answer: You should have received your refund by now if you filed your return electronically. If you filed a paper return, it could take a very long time, as the IRS is backed up processing paper returns.

Viewer name: Lori

Viewer question: What to do when Citibank loses your 401k check?

Volunteer name: Amanda Boston, EA

Answer: You contact the manager and have them remedy the issue. If you did not receive the money in the tax year and received a 1099-R reporting the income, DEMAND that they issue a corrected 1099-R removing the income.

Viewer name: Ray

Viewer question: How can I receive a stimulus check when I don't have to file taxes because I'm low-income?

Volunteer name: KK Surugucchi, UWBA

Answer: If you haven't received your stimulus checks so far, it is likely because you didn't file a tax return in 2019. You should file tax returns for both 2020 and 2021 to claim them. Many sites associated with the United Way Bay Area will help file your tax returns for you. You can look up sites here:

https://earnitkeepitsaveit.org/

Viewer name: Ricki

Viewer question: 10/2021 we received FVT award of $160,500: 100k Emotional Distress Nuisance Reconsideration, 60k Emotional Distress Zone of Danger Tier 2, 500 Personal Injury Smoke Inhalation.

11/2021 30% of Total Determination was disbursed: $48150 less 16,050 attorney fees resulting in $32,100 actually received by us. What amount do I include as income on my 2021 1040?

Volunteer name: Larry Pon, CPA, EA

Answer: You report the total gross amount on Form 1040, Schedule 1, Page 1. You subtract the nontaxable amounts on Form 1040, Schedule 1, Page 2. If you received a settlement for physical injury, that is not taxable which would be the Smoke Inhalation portion. The attorney fees are not deductible on the federal return because there are no longer Miscellaneous Deductions on Schedule A, however, this is still deductible on the California return. Please review IRS Publication 4345

https://www.IRS.gov/pub/IRS-pdf/p4345.pdf

Viewer name: Susan

Viewer question: Federal income tax refund has not arrived. They have $5503 of our money. They say they have no record of it, information is not accepted. How do I solve this?

Volunteer name: Amanda Boston, EA

Answer: If you filed by paper it will take up to 9 months for them to process your return. If you e-filed you will be able to provide them with an e-file code that will prove you filed and they can trace your return and refund.

Viewer name: Charlotte

Viewer question: Why do I have to pay less in taxes even though I learned more this year?

Volunteer name: Amanda Boston, EA

Answer: Check to see if you had an increase in withholding or deductions

Viewer name: James

Viewer question: Are both IRA and non-IRA Investment Advisory Fees deductible under miscellaneous deductions on CA Income Tax Return?

Volunteer name: Norman M. Golden, EA

Answer: Yes. However, for fees on a non-IRA account, you cannot deduct the fees for the portion that is for California tax-exempt income.

Viewer name: Cathy

Viewer question: Amended tax form to show earned income credit that was fully processed in October 2021. Said I should have received from Franchise Tax Board by now. What do I do?

Volunteer name: KK Surugucchi, UWBA

Answer: I presume you are referring to the Golden State Stimulus. You should contact the FTB:

https://www.ftb.ca.gov/about-ftb/newsroom/golden-state-stimulus/help.html#Contact-us-about-the-Golden-State-Stimulus

Viewer name: Ark

Viewer question: How can I receive my 2020 tax refund?

Volunteer name: Amanda Boston, EA

Answer: File a tax return - if you have filed a return online you need to call the IRS (be prepared to be on hold for 3 hours) If you filed online you will have an e-file code that you can provide them to trace your return. If you filed by paper you will wait a while longer for them to process it. I imagine you had unemployment income or your Economic impact payments did not match their system. These returns were held up in processing by understaffed and underfunded IRS. Many still unprocessed!

Viewer name: Donald

Viewer question: Do I have to pay tax on unemployment monies received? I thought I read somewhere it is exempt this year.

Volunteer name: Norman M. Golden, EA

Answer: Unemployment benefits received in 2021 are taxed in full on the federal return; there is no exclusion like there was for 2020. California does not tax unemployment benefits.

Viewer name: Erin

Viewer question: How can I get my delayed 2019 tax refund?

Volunteer name: Larry Pon, CPA, EA

Answer: It is difficult to call the IRS on the phone right now, so the best way to check on your refund is by signing up for an online account with the IRS. Go to IRS.gov/account

https://www.IRS.gov/pub/IRS-pdf/p5507.pdf

Viewer name: Hue

Viewer question: I have not received 1444-C but I got the third stimulus check. How should I answer this question on the 1040 tax return?

Volunteer name: Alexander Ho, United Way Bay Area

Answer: It would be best to answer how much you received in your account or by check if you did not receive the EIP letter. The letter is essentially a verification of what you should have received. Remember that the 1040 Tax Form does not include the stimulus check in gross income. However, those who did not receive their stimulus checks can receive a tax credit for any amounts they are missing.

Viewer name: Jeffrey

Viewer question: Can I receive additional tax credit for extra electrical work?

Volunteer name: Larry Pon, CPA, EA

Answer: This depends upon the electrical work. If it is a repair on your home, that would be a personal expense. If it is an electrical upgrade or rewiring, etc., it may be an improvement that adds to the Cost Basis of Your Home. However, if it is in connection with connecting solar panels, it may be part of the Residential Energy Credit. Take a look at Form 5695 and instructions. https://www.IRS.gov/pub/IRS-pdf/f5695.pdf

Viewer name: Scott

Viewer question: If I received my EDD benefits late, do I still have to pay taxes on them?

Volunteer name: Norman M. Golden, EA

Answer: Yes, taxpayers are on what is called a "cash basis" of accounting. Meaning they report income when it is received not for the period it is for.

Viewer name: David

Viewer question: How can I check to see if I am signed up for the Stimulus Program?

Volunteer name: Amanda Boston, EA

Answer: You do not sign up, it is automatic. https://www.IRS.gov/newsroom/recovery-rebate-credit

Viewer name: Karin

Viewer question: We are part of the PG&E lawsuit, and received a partial payment in 2021. We are being told that we will NOT be getting a 1099 and that we need to give our payment breakdown to our tax professional. Doesn't the IRS require that 1099's be sent for taxable income? How is it possible that they are not sending 1099's? Should we assume that all settlement money is not taxable? The whole situation is very frustrating and the attorneys office just tells us that they are not tax attorneys so they can't help us. The breakdown shows our overall settlement, there is nothing on it showing what we were paid out in 2021, and nothing that says what is and isn't taxable income.

Volunteer name: Norman M. Golden, EA

Answer: All income is taxable unless there is a specific Internal Revenue Code that excludes it. Awards for physical injuries are excluded. Awards for emotional distress are taxable. Awards for property damage depends if you have a gain on the involuntary conversion.

Viewer name: N M

Viewer question: Is it correct that the rest of the child tax credit would be received after tax is filed?

Volunteer name: KK Surugucchi, UWBA

Answer: That is correct. You should have received half the total credit in advance in 6 monthly payments. You report what you have received on your tax return on form 8812, and the balance will appear as a credit.

Viewer name: Anna

Viewer question: My husband and I (filling jointly) sold our Ca primary house in December 2021. Capital gain 900K. If we subtract 500k, 100K-Real Estate fees and all title fees, 30K improvements, the final net capital gain is 270K. We invested from this many 415K in December 2021 to the new construction investment (or maybe primary) house that will be ready late 2022 or 2023. Can be tax for 2021 differed?

Volunteer name: Amanda Boston, EA

Answer: No - that rule went away over 25 years ago. Now you can take the Section 121 exclusion of $250k per person for owning and living in the home as principal residence for 2 of the last 5 years and pay capital gains tax on the rest.

Viewer name: Barry

Viewer question: Why hasn't the IRS repaid me the first $10,200 collected from EDD in 2020 when I filed my taxes?

Volunteer name: Larry Pon, CPA, EA

Answer: It depends upon your income in 2020. If your income was over $150,000, then you would not be eligible to exclude the first $10,200 from unemployment income. If you do qualify for the $10,200 exclusion and you filed your tax return before the tax law change and did not get a refund, then you should amend your 2020 tax return to claim the refund.

Viewer name: Frank

Viewer question: What to do when your tax service is not responding to your calls?

Volunteer name: Amanda Boston, EA

Answer: Call and leave a message threatening to file Form 14157 This is a formal complaint on your preparer. If the preparer is unenrolled (not licensed then there is less that you can do.) Always use an enrolled preparer. If they are registered with CTEC then you can try to contact CTEC and report them there.

Viewer name: Richard

Viewer question: Background: Robert (Dad) passed in 2015 and Virginia (Mom) passed in 2017. Dad worked at LLNL as was a class member of a Retiree suit that was settled successfully in 2021. Mom never worked at LLNL but was covered by my dad. The settlement ($2,745.90) was paid in 2021 and has been distributed to the heIRS. I have received a 1099-MISC for the above settlement. The 1099 is made out to (Redacted)

First question is: The reporting TIN is my dad's SSN (Robert) not Virginia (name is the recipient box). Do I need to get a revised 1099-MISC?

Second question: Do I have to file a 1040 for Mom or Dad or both for this money? Do I use the SSN or their EINs that were created after they passed?

Volunteer name: Norman M. Golden, EA

Answer: It has been reported that the LLNL settlement is likely to be taxable to the recipients. It is highly unlikely that you can get a correctly Form 1099, and it really doesn't matter. Because your parents are both deceased, it would not be reported on a Form 1040. If their estates are still open, then it would be reported on Form 1041. If their estates have been settled and are now closed, I would recommend just reporting it on each of the beneficiaries' Form 1040. Are you the sole beneficiary of their estates? If so, then you are getting the settlement and will be taxed on it. If you have siblings, each of you should report your share.

Viewer name: Tiffany

Viewer question: I made a 529 plan withdrawal to pay for my son's college tuition and dorm and meal plan costs. The amount of money withdrawn is the exact amount I paid the school. Do I have to put all of these in my turbo tax?

Volunteer name: KK Surugucchi, UWBA

Answer: The short answer is yes. You will have received a 1099-Q showing the distribution from the plan, etc. You have to show that all of it in your case was used for qualified education expenses.

Viewer name: adrianzuko7

Viewer question: I am a self employed declare single I going to report I make 50 thousand last year total. I rent a apartment how much do I have to pay to IRS?

Volunteer name: KK Surugucchi, UWBA

Answer: You will have to prepare a tax return to make that determination. If you are not using your apartment for your business, then the rent you pay is inconsequential to your tax situation. At $50K of total income you will be in the 12% tax bracket. Your tax will be of the order of $4000.

Viewer name: Marianne

Viewer question: Sold home in Dec 2021 for 630k and purchased new home for 648k. Capital gain 240k from sale. What can I use to reduce capital gain for 2021 taxes. Or can I delay capital gain and add to 2022 taxes so I can use deductions from new home purchase?

Volunteer name: Amanda Boston, EA

Answer: If you lived in the home for 2 of the last 5 years as your principal residence then you can claim the section 121 exemption of $250k per spouse who lived in and owned the home during that time frame. You cannot defer the gain. I you do not qualify for the section 121 exclusion then you can increase your basis with improvements you made and any closing costs not related to mortgage interest and payoff.

Viewer name: Sylvia

Viewer question: Will I be penalized? Do I have to fill out form 5329 for 2019? Shall I request that my name be listed as the holder of the account and start taking RMDs when I turn 72 1/2 years? Are RMDs are now required as of 72 1/2 years old? Thank you so much for your help.

Volunteer name: Larry Pon, CPA, EA

Answer: Required minimum distributions (RMD) from your IRA account start at Age 72. This means you have until April 1 after the year you turn 72 to take your fIRSt RMD. This means you can take one RMD when you turn 72 OR None when you turn 72, but TWO distributions when you turn 73. If you do not take your RMD, the penalty is 50% of the RMD.

Viewer name: Teresita

Viewer question: I received approximately 10k in UI during the pandemic. I did not have taxes taken out and wondered if I am liable to pay taxes for this amount?

Volunteer name: Amanda Boston, EA

Answer: If you received this in 2020 you will not pay tax. If it was 2021 you will pay tax to the fed, not CA

Viewer name: Layla

Viewer question: Is there a place that will do your taxes for free in Richmond? I used to go to social services in Oakland, but can't find one in our new city.

Volunteer name: Norman M. Golden, EA

Answer: Go to the IRS VITA site (www.ci.richmond.ca.us) to find a location, if any.

Viewer name: Maria

Viewer question: Is it true that if a married couple filing jointly has earned $80k, or less for 2021, the capital gains tax on stock profit made on stock sold in 2021 would be 0%?

Volunteer name: Amanda Boston, EA

Answer: Yes - that is correct. You still need to file a return and report the gain on Sch D

Viewer name: Suzanne

Viewer question: Received EIP card Jan. 2021 for $600. Got stimulus check of $600 in November 2021. Should I have received a third payment?

Volunteer name: Amanda Boston, EA

Answer: the Jan 2021 payment was technically for 2020 and paid out late. The $600 you received was most likely from CA. If you qualify the 2021 payment was $1400. https://www.IRS.gov/newsroom/recovery-rebate-credit

Viewer name: Joseph

Viewer question: I have filed my tax amendment return last june 2021, and yet haven't received the return from the federal. I spoke to them 3x in the phone for follow up and still nothing. Now, I couldn't reached any person on the phone and it's almost a year now.

Volunteer name: Norman M. Golden, EA

Answer: The IRS is terribly understaffed and can't keep up with the workload. I had a client who finally last June got his refund from an originally filed 2018 Form 1040. You could call the IRS, but be prepared for a long wait.

Viewer name: ajuliana83

Viewer question: Is the IRS processing taxes fast this year or not

Volunteer name: Larry Pon, CPA, EA

Answer: The fastest way to get your tax return processed is by filing electronically. The IRS is still processing 2019 paper filed tax returns. Also the IRS and FTB are also checking identities of taxpayers so that may slow down processing. If you input any information incorrectly, that may delay processing.

Viewer name: Jerry

Viewer question: Sole proprietor who received PPP loan in 2021, received complete forgiveness in 2021. Does this need to be reflected in my income tax filing?

Volunteer name: Larry Pon, CPA, EA

Answer: Yes, take a look at the instructions to your tax forms. If you received a PPP Loan and received forgiveness, there is required disclosure on your tax return. Take a look at Page 23 of the 1040 Instructions.

https://www.IRS.gov/pub/IRS-pdf/i1040gi.pdf

Viewer name: Brooke

Viewer question: How do I file for the credit for the EV charger I installed in my garage in 2021?

Volunteer name: Amanda Boston, EA

Answer: File form 8911 with your federal tax return https://www.IRS.gov/pub/IRS-pdf/f8911.pdf

Viewer name: Melina

Viewer question: My minor children (8 & 13) do modeling. Do I have to file taxes for them? Is there an income minimum for that? If so, is it a separate tax return?

Volunteer name: Alexander Ho, UWBA

Answer: Minor children who earn enough income may also need to file separate tax returns in their names. They would still be filing as dependents however. The filing threshold for dependent children is usually $12,550 of earned income per child; over that they would be required to file a return.

Viewer name: Jann

Viewer question: Only income is social security + minimum required from IRA. In past year my husband researched and found we did not have to file. We saved during our working years so no other income. He passed away so I am looking for general help. Does not seem to be any reason to. I don't see that anything would be due to either IRS or to me.

Volunteer name: KK Surugucchi, UWBA

Answer: It will depend on the IRA distribution. If it is less than $12,500 (higher if you are over 65), then you don't need to file. You shouldn't have had any taxes withheld on it, otherwise you should file to get them refunded.

Viewer name: Ray

Viewer question: I sell items on ebay and probably gross about $1k a year. I do not get a form from them because it's not over $19k. 1. Do I have to claim this as income since I already paid for it? 2. Should I consider it business income?

Volunteer name: Alexander Ho, UWBA

Answer: Hi Ray. Yes, selling items on eBay is considered business income, and would require filing a Schedule C for Self-Employed taxpayers. EBay may not send a 1099 form if gross receipts are under $19k, however, taxpayers are still responsible for having records of their income and expenses.

Viewer name: Mike

Viewer question: Are CA Wait Time Penalties taxable income? If not, how should it be filed?

Volunteer name: Norman M. Golden, EA

Answer: The penalties are not tax as wages, therefore, no withholding was taken on them. However, you may have received a Form 1099-MISC and the penalties should be reported on Form 1040 Schedule 1.

Viewer name: Barbara

Viewer question: why do we have to pay tax on our entire PG&E settlement even though we only received 66% of it.

Volunteer name: Amanda Boston, EA

Answer: According to the tax laws you pay tax on the entire settlement amount including the amount paid to your attorney. (Unless you were physically injured) This is a HUGE issue with the current tax law and Congress needs to take action on these types of issues. Write to your Congressperson. In 2018 Congress did away with the place on the return to deduct Attorney fees - even if it was subject to 2% of your AGI.

Viewer name: Alexander

Viewer question: My mom passed recently and I am preparing to file her fiduciary 1041 form. Everything she left me is through her living trust, I am the successor trustee and sole beneficiary. If I take some capital losses to offset the dividend income since her passing in her stocks portfolio, will it be necessary to file the 1041 form? Or would it be advisable to file the form in any case, even if the income is zero or less?

Volunteer name: Norman M. Golden, EA

Answer: You may have to file two returns for your mother. From January 1 to the Date of Death, the income will be reported on mom's final Form 1040. She may not have a reporting requirement, depending on the amount of income. From the day after the Date of Death, the income is reported on the Form 1041. A Form 1041 is required if the Gross Income is more than $600. In the final year of the trust, the income and deductions are reported on the Form 1041, but is then distributed to you on a Schedule K-1. The capital losses will be combined with your own on your Form 1040 Schedule D, but remember you can only take capital loss deduction for the lesser of $3,000 or the actual amount of the losses. The excess will be carried over to the next tax year.

Viewer name: Christine

Viewer question: We are a recently retired married couple who just completed our fIRSt year living on social security and savings. How is tax calculated on social security income? If savings are used to augment that income is that calculated at a different rate?

Volunteer name: KK Surugucchi, UWBA

Answer: If social security is your only source of income, it is not taxable at all. If your savings are in the form of investments, CDs, etc, then any earnings on them that are reported on 1099-INT, 1099-DIV, etc. will be considered taxable income. In general, if half of your social security payments plus the rest of your income exceeds $25,000, some of your social security payments will be taxable. At the extreme end, a maximum of 85% of social security payments will be taxable.

Viewer name: Cesar

Viewer question: If there are back taxes due, can the total amount be negotiated with the IRS? Are there any organizations that provide help for this kind of tax problem?

Volunteer name: Amanda Boston, EA

Answer: Yes - you can file an offer and compromise to negotiate the total amount due. You must qualify for this, meaning that you have little income and/or are sick or dying. It is difficult to navigate. There are professionals that do this type of work for a fee. It is time consuming and involves much paperwork.

Viewer name: Tami

Viewer question: Hi, I had to file a 1040 form because of an HSA account. I was wondering if I can file a 540 2ez instead of a 540? Thanks

Volunteer name: Amanda Boston, EA

Answer: Ca does not recognize HSA accounts as being tax deferred so you will have to file the 540 and Form CA to show the difference to your Federal income.

Viewer name: Vanessa

Viewer question: I filed my taxes on February 1st and they were accepted. I am expecting a refund of $5935. When I go to the IRS website to track my refund, it just says that they are still processing. It has never taken this long and everyone else that I know who filed around and after the same time as me have received their refund already or have been given a date to expect theIRS. Is there a reason mine could be taking so long? Thank you!

Volunteer name: KK Surugucchi, UWBA

Answer: One possibility is that you claimed child tax credit after receiving advanced CTC payments, and the amount of advanced CTC that you reported does not match the IRS records. It could also be due to other credits you claimed, such as earned income credit, or stimulus payments, etc.

Viewer name: Sanjay

Viewer question: What is the amount that I can write off? I had about $6k worn of medical bills

Volunteer name: Amanda Boston, EA

Answer: The amount you can deduct for medical bills is dependent on your filing itemized deductions. If you do file itemized deductions (Sch A) then you will only be able to deduct the amount that is above 7.5% of your AGI.

Viewer name: Joan

Viewer question: United way did a correction on my 2020 taxes. I was on EDD and I filed early and I had to pay taxes on my EDD. I went on the IRS website about get my refund & nothing was there. I've already waited 1 year for the IRS to fix it, they haven't. How long should I wait to my refund on the correct?

Volunteer name: KK Surugucchi, UWBA

Answer: If you filed an amended 2020 return, the IRS could take a long time to process it.

Viewer name: Anthony

Viewer question: is s.s.d.i. tax abowel 797.00 month ? I was told no

Volunteer name: Amanda Boston, EA

Answer: Social Security Disability is not taxable if you have less than $25k Single or $32k Married Filing Joint Total income. Once your total income goes above these amounts it is taxable on up to 85% of the amount received.

Viewer name: Dwight

Viewer question: Have several IRAs and a couple of 401ks, can I take my required percentage total out of one account or do I have to take the percentage out of each?

Volunteer name: Norman M. Golden, EA

Answer: Taxpayers must total all of the Fair Market Value of their accounts as of December 31, 2021 to calculate the RMD. However, taxpayers may choose which account the RMD is taken from.

Viewer name: Charles

Viewer question: I received the golden state stimulus. Do I have to declare that money on my federal tax return? If so, on which line of my 1040?

Volunteer name: KK Surugucchi, UWBA

Answer: No. The GSS is not considered taxable income on the federal return.

Viewer name: Mary

Viewer question: Received social security. 2021 required 1st year RMD. Underpayment of $5000. Is that tax penalty 5% of $5000= $250.Is that what I have to pay?

Volunteer name: Norman M. Golden, EA

Answer: Please clarify what the $5,000 underpayment is. Is that the amount of the RMD not taken or the amount of tax owed?

Viewer name: Chris

Viewer question: Daughter is college student in Nevada, has part-time jobs. Does she have to file state tax forms in California and Nevada?

Volunteer name: Norman M. Golden, EA

Answer: Good news and bad. Nevada does not have a personal income tax return. California holds that California residents (your daughter) who go to school in another state are still CA residents, and, therefore, need to file a CA resident tax return. Residents report their Worldwide income on both US and CA tax returns.

Viewer name: Brijet

Viewer question: Do you have to file taxes if social security is your only income?

Volunteer name: Amanda Boston, EA

Answer: No need to file if Social Security is your only income. Unfortunately I have found that you may miss out on Stimulus money if you do not file, even though the government says you do not need to file to get it.

Viewer name: Imelda

Viewer question: CA teacher in 2021, moved to Indiana for PhD program in August. Hvae stipend and tuition through school. Do I need to file state taxe sin CA only, or both CA and Indiana?

Volunteer name: Norman M. Golden, EA

Answer: If the teacher moved out of state for the program and will return to CA, then the Franchise Tax Board maintains that the teacher is still a CA resident and has to report the income.

Viewer name: Wayne

Viewer question: I have a managed IRA. Are fees tax deductible and is there a limit?

Volunteer name: Amanda Boston, EA

Answer: If the fees are paid within the IRA - they are not deductible. CA ONLY If you pay them outside of the IRA, then they are deductible - but not on Tax-exempt income. The limit is subject to 2% of your AGI and you must itemize deductions to take advantage of this. FEDERAL eliminated this section of the tax returns in 2018.

Viewer name: Nancy

Viewer question: Stopped filing taxes years ago. Now that I received stimulus, do I have to file again?

Volunteer name: KK Surugucchi, UWBA

Answer: If you have received all your stimulus payments, and your income (excluding those payments!) is below the filing threshold, you don't have to file.

Viewer name: Harry

Viewer question: Have a -1300 cap loss this year, also have $3000 carryover from losses in 2020 on this tax return. In 2020, lost over 15,000 can wipe off $3000 increments on my returns. Do I add $1300 loss from this year to balance of remaining losses that I can take in future years?

Volunteer name: KK Surugucchi, UWBA

Answer: Yes, you can add to your capital loss carryover by incurring additional losses during a tax year, and you can whittle it down by adjusting against capital gains in a different year.

Viewer name: Sue

Viewer question: Quit job to support mom, filing married jointly, how do I claim this on 1040?

Volunteer name: Amanda Boston, EA

Answer: To file married jointly you select the box at the top of the return. There is no deduction for quitting your job for any reason. You may be able to claim your mother as a dependent because her taxable income is below $4300. There are a few factors to being able to claim her, fIRSt being you have to support her and must be a US citizen or US resident.

Viewer name: Robert

Viewer question: Made 24k last year, CA state tax says I owe $197 even though I paid and received unemployment in Texas, never employed in CA, where I'm a resident/ What do I do?

Volunteer name: KK Surugucchi, UWBA

Answer: As a CA resident, you are taxed on worldwide income.

Viewer name: Randy

Viewer question: Paying all of mom's nursing home cost, writing it off as a deduction. Another family member will pay some, I still qualify for the deduction. Can family member give me money as a "gift", then I write check to cover nursing home cost, enabling me to receive full medical deduction? Amount contributed falls under 16k limit

Volunteer name: Norman M. Golden, EA

Answer: You may claim your mother's medical expenses if she qualifies as your dependent. If she has $4,300 or more in gross income, she cannot be your dependent. If she doesn't, and you provide more than have of her support then you can claim her. The IRS may take the position that the gifts from your siblings are not real gifts, but part of their support for her. However, see IRS Form 2120, Multiple Support Declaration, for the way you can claim her. They have to sign the form and agree not to claim her.

Viewer name: Brenda

Viewer question: I never received the $600 Stimulus. I included it in my 2020 taxes. It wasn't included in my refund. I contacted IRS throughout 2020, inquiring on the status. I had an appointment with a representative in October,2020 to research the payment. I still haven't received the Stimulus payment. Can you help me?

Volunteer name: Amanda Boston, EA

Answer: The IRS is significantly understaffed and underfunded. If you were due the $600 then your 2020 return should have been selected for review along with thousands of other returns that had stimulus mismatch errors. These unfortunately are still being processed. I would call again to see if you can get an answer. Plan to be on the phone for 3 hours.

Viewer name: Linda

Viewer question: I file online and last year was to receive $1608; July 2021 I received $1,011.06. really the IRS doesn't deal with cents. How do I file this year? They owe me 596.94 from last year.

Volunteer name: KK Surugucchi, UWBA

Answer: You should have received a letter from the IRS explaining why they adjusted your refund. You should create an IRS account, and look at your tax return history. As far as filing this year, there is no provision to include what you believe they owe you for prior years.

Viewer name: Dee

Viewer question: Are the CA stimulus and EITC received in 2021 taxable income on the federal tax return for 2021?

Volunteer name: KK Surugucchi, UWBA

Answer: The CA stimulus is not taxable on the federal return. Any CA EITC received as part of your 2020 CA refund could be taxable on the 2021 federal return if you itemized deductions on your 2020 federal return and your deductions increased by including state income taxes you paid in 2020.

Viewer name: Clarence

Viewer question: Hi, I have IRA RMD account with Vanguard Funds. I went online on Dec. 31, 2021 to redeem my annual RMD and put in the sell order which they confirm with trade date of 12-31-21. However, Vanguard then posted it on the settlement date, 3 days later. Now the IRS will not be notified on the sale until 2022. Vanguard will not change the date. What should I do? Place it on my 2021 tax return or do I have to file a form 5329 to waiver the shortfall penalty tax? I have already filled out the 5329 form and explanation letter, just in case.

Volunteer name: Larry Pon, CPA, EA

Answer: Never wait until the last day to do anything because as you experienced, glitches can happen. Have you received the 1099R for 2021? If not, report it on your 2022 tax return and don't forget to initiate your RMD earlier in 2022. You can include a 5329 with your tax return with an explanation that it will be reported on your 2022 tax return.

Viewer name: Nicholas

Viewer question: Do I report the State Disability Insurance payments I received in 2021 and do I pay taxes on them? I have not received any 1099 forms. Please answer by email.

Volunteer name: Larry Pon, CPA, EA

Answer: SDI is not taxable which is why you did not and will not get a 1099.

Viewer name: Robert

Viewer question: Do I need receipts or verifications of cash donations to charity? If I take standard deduction, do I need to submit anything beyond the basic total amount ($1300)?

Volunteer name: Amanda Boston, EA

Answer: If you deduct charitable contributions on your return. Whether it be the $600 standard deduction or more with Sch A itemized, you must have documentation in your files showing that you paid the charity, how much and a date. If the donation was over $250 you are required to have a letter from the charitable organization with the above information also containing the Tax ID number and that no goods or services were exchanged for the donation. I am not sure what you refer to with the basic amount of $1300. The only standard deduction for charity is $600 if you itemize and you still must have documentation that it went to an organized charity. Non-cash donations do not qualify for the $600 amount with standard deduction.

Viewer name: Sam

Viewer question: I was an executor/trust official last year, do I have to report as income the executor fee?

Volunteer name: Norman M. Golden, EA

Answer: Yes. If this was the only executor fee you received and you have a regular job, then it is not also subject to self-employment taxes.

Viewer name: Anna

Viewer question: My husband and I have 250 000 capital gain (excluded real estate, title company taxes, fees, commissions, 500K, improvements) selling primary residence in Ca in 2021. The purchase price in 2016 670K.

Can we defer a tax from 250k to invest to the new property (primary or investment) purchase price 400 K ?

Where/how to invest 250k capital gain to deferred tax?

Volunteer name: Norman M. Golden, EA

Answer: You cannot defer the gain. The deferral of gain on the sale of a primary residence was repealed from sales on or after May 6, 1997. Section 121 was enacted to provide up an exclusion of up to $250k if you owned the residence and lived in it as your primary residence for 2 of the last 5 years. For a married couple, each may claim an exclusion of up to $250k, as long as they both lived in the residence for 2 of the last 5 years.

Viewer name: Carl

Viewer question: I just got letter 6475 from the IRS saying I got a 2021 Economic Impact Payment of $1,400, but in fact I didn't get anything. In 2020 my AGI was below the EIP limit (no IRA distribution that year) but in 2021 my AGI is above the EIP limit. So, will the 2021 payment be based on my 2020 income or the 2021 income? If I really do qualify for the 2021 payment (which I haven't received) will it be available as a credit toward my 2021 taxes?

Volunteer name: KK Surugucchi, UWBA

Answer: If you did not receive the $1400 payment, but received a letter from the IRS stating that you did, you will have to work with the IRS to track the payment

https://www.IRS.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-j-payment-issued-but-lost-stolen-destroyed-or-not-received

The payment that you supposedly received was based on your 2019 or 2020 income. If your 2021 income disqualifies you from the EIP3 payment, then you can't claim it even if the IRS has not sent it to you. But if you qualify based on the 2021 income, and if the IRS records also indicate that you didn't receive it, you can claim it on your 2021 tax return as a refundable credit.

Larry Pon, CPA, EA chiming in here. Also file a Form 3911 to get a trace on the checks. If you can prove you did not endorse the checks, you can get this fixed.

Viewer name: Kumar

Viewer question: Which IRS form do I use to report sale of primary residence and claim the $250,000 exemption from capital gains? I don't see the box for entering the $250,000 anywhere.

Volunteer name: Norman M. Golden, EA

Answer: The sale of a residence is a capital asset. All sales of capital assets are reported on Form 8949 and then transferred to Schedule D. On the Form 8949, you will use Part II and check box F at the top. In column (e) you will enter "EH" and put in column (g) the total of the selling expenses and the allowable exclusion. Remember, the exclusion is not $250k, but up to $250k. Meaning, if the gain is only $185k, then the exclusion is only $185k.

Larry Pon, CPA, EA - Also take a look at IRS Publication 523 - Selling Your Home

https://www.IRS.gov/pub/IRS-pdf/p523.pdf

Viewer name: Lisa

Viewer question: Whether the cash received back from canceling a life insurance policy taxable?

I took out a life insurance in 1963 and still paying monthly premiums for it. Since I have no longer need this life insurance.

Volunteer name: Amanda Boston, EA

Answer: It depends - but typically if this is your principal payments back then it is not taxable. If there are earnings being returned to you then those will be taxable and will be reported on a 1099-R

Viewer name: Kristin

Viewer question: Calpers pulled retirement payment because they claim the incorrect 1099 was filed. What do I do?

Volunteer name: Larry Pon, CPA, EA

Answer: Call CalPers to work this out. You need to have your bank statements to show the correct amounts received and reconcile to the 1099.

Viewer name: Holly

Viewer question: Do I have to file a partial year resident form for when I moved to WA, even though I was only there for five months before I moved back to CA?

Volunteer name: Amanda Boston, EA

Answer: Washington State does not have a state tax. So no need to file anything with WA. You will want to be sure to file your CA part-year resident return for that year with complete details of your time in CA so that you do not pay CA taxes on your WA earnings if you qualify as a non-resident for that time period.

Viewer name: Gwenda

Viewer question: Can a stay at home mom file separately from spouse?

Volunteer name: KK Surugucchi, UWBA

Answer: Married Filing Separately is a filing status available to every spouse. However, here in California, which is a community property state, it can get complicated determining assets and liabilities between the spouses. Plus you could lose a lot of benefits such as EIC, etc.

Viewer name: Angelina

Viewer question: I purchased a house in 2019 for $497.000 in California, Nevada City.

I used a house as Airbnb business, had a loss for 2 years.

I decided to sell a house for $650,000.

Will I pay a tax on gain?

Volunteer name: Amanda Boston, EA

Answer: It depends on the amount of gain and if you deducted or carried forward the losses on this property. There will also be a depreciation recapture that you will have to take into account. I cannot answer your question based on the information you provided.

Viewer name: Bridget

Viewer question: If you did not take your tax refund but rolled it over for future tax purposes can it be applied to a future tax debt? I did not collect my tax refund from 2020. It was several thousand dollars. If I have a tax debt this year can that money sitting in the 2020 refund pot be used? Would I be able to use that on refund amount towards future tax bills? Thank you.

Volunteer name: KK Surugucchi, UWBA

Answer: Yes, if you chose to apply your 2020 refund toward your 2021 taxes, you should include it in your payments, and it could lead to a refund on your 2021 tax return. You could now choose to apply this towards your 2022 taxes. However, I would ask - why are you giving the government an interest free loan?

Viewer name: Eva F

Viewer question: I was used to buying turbo tax for my previous tax years. I had a problem with their online system (turbo tax) early in 2020, so didn't complete my taxes at all. Where can I get free help preparing my previous year and now this current year.

Volunteer name: Norman M. Golden, EA

Answer: If you qualify, you can find an IRS VITA site.

Viewer name: Barbara

Viewer question: My husband and I got a Form CP80 from Department of The Treasury/Internal Revenue Service that looks legit and according to online things I've read, it is - it says we need to resubmit our taxes for 2020 as they 'never received them', and sif we have already filed a return (we have), send a NEWLY SIGNED copy (not photocopies?!) to a different address (not the one we sent the return to previously, or risk losing our tax credit. This is impossible, as we owed money last year and paid with a check - the check was cashed, and the return was in the same envelope. I am scared and think I should send this in as I've read it's legit, but my husband is convinced it's a scam and won't let me. What to do??

Volunteer name: Amanda Boston, EA

Answer: I would call the IRS to verify. There is such a letter, but the fact that your check was cashed is concerning. If the IRS received your check in the same envelope and lost the return it is possible. However, worth a call before you send your social security number and all your important tax information out. I recommend always e-file in the future and this will not happen again.

Viewer name: Cynthia

Viewer question: File for HOH, someone stole my father's SSN, blocked number, now have to file paperwork each year. How do I get this changed?

Volunteer name: Amanda Boston, EA

Answer: It seems like you claim your father as a dependent? If he has a blocked number you should still be able to file a paper return with the information.

Larry Pon, CPA, EA - also consider applying for an Identity Protection PIN (IP PIN)

https://www.IRS.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

The IRS will provide a 6 digit number you input on your tax return to give some extra identity protection.

Also consider filing Form 14039 - Identity Theft Affidavit

https://www.IRS.gov/pub/IRS-pdf/f14039.pdf

Viewer name: Barry

Viewer question: Can I deduct SDI that was withheld in 2021- the year I drew Family Caregiver Leave- or only from past years?

Volunteer name: Norman M. Golden, EA

Answer: As a "cash basis" taxpayer, you can only take the deduction in the year they were paid.

Viewer name: Dario

Viewer question: If I owe taxes because not enough was withheld, can I ask for an extension to pay the taxes owed?

Volunteer name: Amanda Boston, EA

Answer: No extension of time to pay will be granted. You can request a payment plan and interest will be charged on the amount due. https://www.IRS.gov/payments/online-payment-agreement-application

Viewer name: Lolli

Viewer question: Should we file if income is less than 60k, and we're retired?

Volunteer name: KK Surugucchi, UWBA

Answer: Assuming you are married filing jointly, the standard deduction is $25,100. You will need to file if you make more than that. However, social security income is generally not taxable, and if it is your only source of income, you don't need to file. If you have a combination of social security income and distributions from IRAs, etc. then it depends on your numbers.

Viewer name: Sylvia

Viewer question: Am I charged for the amount over 1,000 if I owed the federal $1267- do I owe the $267?

Volunteer name: Norman M. Golden, EA

Answer: If your return shows that your balance due is $1,267, then you owe $1,267. I think you are reading about the underpayment penalty, which may be assessed if the balance due is more than $1,000 and you had less than 90% of the tax liability paid in through withholding and estimates.

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