Discussion:Dependent Child Filing Requirements
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Discussion Forum Index --> Basic Tax Questions --> Dependent Child Filing Requirements
Discussion Forum Index --> Tax Questions --> Dependent Child Filing Requirements
| 31 January 2008 | |
| Is a dependent child required to file a tax return if he/she had gross proceeds from a stock sale of $1,000? His/her net imcome is below $850 of unearned income and he/she had no earned income.
Thanks. | |
| 1 February 2008 | |
| YES
(Technically the correct answer is NO, but you would have to file to show the basis in the stock in order to come to the conclusion that unearned income is below $850, therefore not filing will result in a letter from the IRS. Easiest way out of the problem is to prevent it in the first place by filing for child.) | |
| 1 February 2008 | |
| Assuming this is the only income reported to the IRS and he does not file, the IRS will do their SFR magic and determine that no tax would be due, so I do not think they would even kick out a CP-2000 on it. | |
| 1 February 2008 | |
| IRS, std ded would be 850, so IRS would tax 150 without a return | |
| 1 February 2008 | |
| And you think they will go to the expense of a CP-2000 for $16? No. The cost of the entire process from assessment and through collection would be significantly more than $16. It will not happen. I am not advising not to file. I am just explaining the practical implications of not filing. The IRS does not publish them, but they have tolerances set for certain calculations. | |
| 1 February 2008 | |
| Assume for a minute that they do send a notice. What is the cost of letting them assess the tax plus 25% FTF penalty, FTP and interest? Compare that cost to the cost of having the return prepared by a tax pro. | |
| 1 February 2008 | |
| A proposed SFR on a little kid for $16, or anything under even under a $100 as a guess, has a fair chance of winding up on the local TV news! IRS tries to think of those things in structuring programs. Also, with 1099-B in general, there's a high chance t/p has at least some basis in it, suggesting a higher tolerance on gross proceeds is called for. But criteria are indeed unavailable under FOIA. | |
| 1 February 2008 | |
| I stand corrected. A lot more expenseive to do a seizure. | |
| 1 February 2008 | |
| The CP2000 is kicked out by a computer, and they have no idea if there is basis or not. Just file the return. | |
| 1 February 2008 | |
| Joanmcq, you don't understand how tolerances work. The program does not produce notices for all under-reporting situations. Even if it assume a basis of zero - no notice comes out. | |
Death&Taxes (talk|edits) said: | 1 February 2008 |
| Last year a $92 audit asssessment was below tolerance for the year 2005, and the local office said that in a no-change letter. | |
| 1 February 2008 | |
| That hints it still could be a hundred bucks, but apparently has not been adjusted for inflation in real long time. The rationale was said to be "nuisance value" assessments and costs to process an assessment case. No tolerance on overpayment cases, except the usual one buck. | |
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