Ask Tax Dad: Old Clothes, An Audit Dispute, And IRA Rollovers

The wisdom of Tax Dad

The wisdom of Tax Dad

Usually, our staff Certified Tax Cat handles readers’ questions about taxes, but he’s also a cat, and cats occasionally just do whatever the hell they want. Filling in for him is Laura’s dad, a retired accountant and real live independent tax preparer. Exclusively on Consumerist this spring, Tax Dad answers your questions.

I always have this question. I donate my clothes to Goodwill. Do I have to write up a description of every piece of item I donate to keep on record? I get a receipt from Goodwill, but they only put [the] date and sign the receipt. I am supposed to fill out the rest? Thanks!

Toby

Hi Toby: Years ago, organizations such as Goodwill used to require that you itemize all your donated goods and that list would be attached to your receipt. Somewhere along the way this morphed to a blank dated signed receipt, which you were to complete on your own. This would not be an issue unless at some point the IRS questions your donation, so I would say it depends on the dollar amount of your contribution.

Most folks fill in something on this form to jog their own memory 3 years from now when they are audited. You can be as detailed as you like in your description, such as 10 shirts, 5 pairs socks, 3 skirts, etc. For larger items, such as a living room set, it may be helpful to include a photo. Just be reasonable.

I was audited a few years ago and as part of being cleared I was to file a tax return for a year that I missed. When I did file that return, there was a rebate expected back to me for close to $6000. I was told by the IRS that it was too late and that the money would not be applied to the amount owed to them. Do I have any recourse? Thanks in advance.

Corby

Hi Corby: sounds as if you have too many problems for us to cover here, but I would like to know why IRS cannot refund your money. You do not say if you have appealed their decision or contacted a tax attorney, but it sounds as if this would be worthwhile. You can check out your options with the IRS at the website listed below. Good luck.

Appeals… Resolving Tax Disputes

Hi! I’m hoping you can help! We are doing our taxes on TurboTax (as we always have) and it really doesn’t seem to be giving me the the right numbers.

Two years ago we rolled over a 401K (from a previous employer) to a Roth IRA and paid the necessary taxes on the conversion. Last year we needed some of that money and cashed out a bit of it. I know that we have to pay the 10% early withdrawal on that money, as we are not of the proper retirement age, but are there other fees we have to pay as well? We’ve paid taxes on it, so it shouldn’t be taxed again, right? Also, should this amount add to our total income? It seems to be throwing us into the next higher tax bracket.

Thanks so much in advance for your help!

Andrea

Hi Andrea: I know Turbotax can sometimes be tricky…you need to fill in all the right check boxes and amounts. I think if you can locate form 5329 in the 1040 form files and fill this in properly, TurboTax will come up with the right answers.

Make sure your form 1099 has the proper code for your withdrawal. Consult IRS Publ 17 if it is still not working right. Here is a link to the the Publ 17 portion I believe would apply to your withdrawal within a 5-year period.

Please remember that you get the advice that you pay for. Information provided by Tax Dad is a starting point, and not intended as a substitute for consulting your own real, live tax preparer or cat.

Have a question for Tax Dad about your federal or state tax returns? Like the IRS, Tax Dad has a deadline: get your questions in before Wednesday, April 10. Send it to us at tips@consumerist.com with “ASK TAX DAD” in the subject line.

PREVIOUSLY:
Ask Tax Dad: Professional Organizations, Accident Settlements, And No Refund In 2014
Ask Tax Dad: A Recovering Slacker, An Incompetent Accountant, And The Tax Return Of The Dead
Ask Tax Dad: Employer Gas Cards, Student Loan Interest, And Escape From New York
Ask Tax Dad: Should I Hire A Tax Preparer? What If I Win The Lottery?
Tax Dad Sez: Send Us Your Questions For Consumerist’s Designated Tax Preparer