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How to Report Capital Gains with the New IRS Form 8949

In the biggest 2011 tax change, the IRS adds a new capital gains form to fill out along with Schedule D

Starting with 2011 taxes the IRS has all new rules for reporting capital gains, complete with a new Form 8949 [Sales and Other Dispositions of Capital Assets]. Basically you have to list on Form 8949 all the transactions that would previously have been reported on Schedule D [Capital Gains and Losses] or the now defunct Schedule D-1 [Continuation Sheet for Schedule D].

You may be surprised to learn the number of things that are considered capital assets – in fact almost all of your personal and investment property qualifies as a capital asset including your home, household furnishings, stocks, and bonds.

When you sell these assets, the difference between the price you bought them at and the price you sell them for is a capital gain (or loss).

All your income from capital gains you have to report – that’s where Form 8949 comes in. Continue reading “How to Report Capital Gains with the New IRS Form 8949”

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No W-2 – What Do I Do?

You worked for a company, it folded, and now you’re out a W-2. Or so you think. Your place of business has until January 31st to send out your W-2, and it won’t be considered officially “late” until after February 15th comes and goes. In other words, if you’re waiting now, you’ll have to keep waiting for another couple of weeks. Don’t panic if your former employer goes under, though. Sometimes, a trustee will be set up in bankruptcy court to handle all the details (like the sending out of W-2s!), but ultimately, W-2 forms are the business’ former owners’ responsibility.

But let’s say you can’t get hold of anyone to send you out your final W-2. What do you do?

Well, you have a number of options. The best and easiest solution is to go through your paystubs and find the data from your final paycheck. All your deductions – FICA, medical, Federal, state, etc. – will be listed somewhere on the stub. 99.9% of those will keep a running total of the total amounts, thereby solving your problem. If you don’t have either available, it’s time to get on the phone to the IRS and listen to some “On Hold” musak.

If you’re up against the wall waiting for your W-2s, you have until the 15th of April to file for an extension. Remember, though – your extension gives you extra time to file, but it doesn’t give you extra time to pay if you owe the IRS a red cent. This is one that catches many tax payers by surprise, year after year.

Finally, if you’re ever in doubt, call the IRS and ask for the definitive answer straight from the source.

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Schedule M Errors in Making Work Pay Forms

In a trend that surprises no one, tax payers are making critical errors with a new tax form.

The Schedule M form is for anyone needing to account for the Making Work Pay credit or retirees who got the free $250 from the government last year. The Making Work Pay credit comes from the February 2009 stimulus package, which stated that working taxpayers can get up to a $400 benefit.

This benefit was automatically adjusted in the witholdings of most Americans’ paychecks; your “benefit” should’ve resulted in a slight increase in your take-home pay. If you’re a self-employed employee, however, you likely didn’t see a dime of it. You’ll need to file a schedule M, and there’ve been more than a few mistakes.
Continue reading “Schedule M Errors in Making Work Pay Forms”