Michigan Tax Legal Questions

Did the divorce decree address the back taxes? If so, then the divorce decree controls. If the divorce decree doesn't address the back taxes, then both are liable for the full amount. However, the IRS can split the tax liability between divorced spouses. If the liability arose at least in part from her income less her payments, then he would only be responsible for paying his share and she would be responsible for her share. For example, if his wages were $40,000 and $$3,500 was withheld and her wages were $60,000 and $1,000 was withheld. There were no deductions or other income. If their joint tax was $8,000. His responsibility is $3,200 ($8,000 tax times 40%). Since he already paid $3,500 he won't have to pay any more and she'll be responsible for the whole amount (you can't get a refund in this program).... Read More

You can take an exemption for children who live abroad, if the other parent, agrees that you're eligible for the exemption. You must file the form, signed by the other parent, giving you the exemptions. Since the other parent lives abroad, they probably aren't concerned about US exemptions so it should be easy to get the form signed (if anything is ever easy between estranged parents).... Read More

Being named in a will as guardian of children is an honor but it has no legal or tax significance. Guardians are appointed by a judge. The only person who qualifies for the exemption is the person who's providing their support. ?That can be changed by the divorce decree but that is only between the two parents, since one of the parents has died, the divorce decree is no longer controlling. If you have provided all of the support for the year, then you get to claim the exemption.... Read More

As far the the IRS is concerned the parent with custody of the child,has the right to claim the child's exemption. ?The 2009 decree is not relevant, as a noncustodial parent, she can only claim the child if you surrender your right to claim the exemption. ? However, if the 2009 decree requires that you sign the IRS form surrendering your right to claim the exemption and you don't sign it when requested, you'll be in contempt of court.... Read More

First, there is no provision in the tax law to claim part of a child. Either you get the whole deduction or you get no deduction. If the court order specifies that you get the deduction this year, take the deduction on your return and see what happens. There is a chance that the child's father is lying about taking the deduction (surprising how often this happens), if you both claim then you have the court order giving you the deduction; when IRS asks for supporting documents?... Read More

You need to find out what your father-in-law paid for the house. In Ohio, that is on file at the county auditor's office. Any gain over the price paid is a taxable capital gain. If you have a loss, it's not deductible because it was personal not business use. When you have taxable capital gain, you're required to file Form 1040 with Schedule D attached.... Read More

Incompetent people can still have taxable income. To use a current example, the comedian Tyler Perry is legally incompetent from injuries suffered in a car accident. However, I'm sure that he's still receiving millions in residuals and has substantial assets that produce income. If your daughter had taxable income, her guardian needs to file a return and pay the tax out of her assets. Most state income taxes don't have a medical expense deduction, which might eliminate her Federal taxes.... Read More

I believe that the revenue agent performing your audit is confused. She is classifying your use of the car as "for hire" because your compensation is based on miles traveled. However, the IRS definition of "for hire" use is used in the transportation of goods or people. It is often pointless to attempt to persuade a revenue agent, the ones assigned to individual audits aren't accountants, they have little understanding of the law and their training is formulaic. To them every issue is black and white, once they have decided how they will handle an item, you can never change their mind. I would advise you to assemble the information she requested. You might be surprised and the actual expense method might give you a bigger deduction. If the actual expense method doesn't, when you get the audit report (the so called 30 day letter) request a determination by the irs appeals office. These people are usually accountants and lawyers and they understand the complexity of tax law and how to use references. Since you do not transport goods or people, they should agree you qualify for the standard mileage method. Since this determination will be based on interpretation of IRS publications and tax cases, you should probably be represented.... Read More

Pass through taxation applies to Federal income taxes, it doesn't necessarily apply to state and local taxes. Some states and cities tax at the entity level and some tax at the owner level. In either case, all cities and states tax based on the "three factor formula" where the work is performed, where the sales are made and where the the business property is located. If all the work is done in Philly, all the sales are made out of Philly and all the business property (probably a computer or two, maybe a server and some inventory). Then it will be subject to Philly city taxes. It doesn't make a bit of difference what the address of the organizer is. In fact, it's quite common if a lawyer is used to have the lawyer's address on the filing.... Read More

The bank can issue a Form 1099-C whenever they determine that they're going to forgive the debt. So the amount on the 1099-C should be any shortage between the amount of the loan and the proceeds of selling the car (the bank calls this the deficiency). The 1099-C is only taxable income, if you're solvent. So if your debts are more than the value of your assets, it's not taxable but you need to report this on your income tax return.... Read More

I don't believe there is any statute of limitations for items not reported on your filed tax returns. For example: If you filed a return, but did not include income that should have been included, the IRS can go after you anytime. If you did not file a return and you should have, the IRS can come after you anytime. For filed returns that properly include all income and properly deduct all allowed deductions, the statute of limitations is either 3 or 6 years after the return is filed.... Read More

No, you're not liable on his back taxes. But you shouldn't marry him until you cleans up the back taxes issue. Either by filing bankruptcy, doing an installment agreement or an offer in compromise. Because if he's married that all those will be based on his joint income with you. Now they will only be based on his own income.... Read More