Contractor income / exp – 1040x – Help to lower my interest / penalty assessed from IRS?
I gratduated from college in 2005. I am not familar with income tax filing. I worked as an independent contractor in 2005 thru the first two months in 2006. When I filed my income tax in 2006, I did not receive 1098-T form my client and I did not know better to file the income and associated expenses, due to lack of knowledge. Now IRS sent me a notice that I need to pay about $2000 for penalty, interest and add’l 2006 income tax related to the missing consulting income (and associated exp) for the first two months in 2006. I have established a LLC in 2005 for this contractor work.
Can you help me to lower the $2,000? I need to reply by end of this week to IRS:
1) I traveled back and forth to the same client’s place during those two months in Jan/Feb 2006, will the mileage is be DEDUCTIBLE as expense? Or It is considered communting miles so I lose the deductibility? What is the IRS publication (and page #) for this rule?
2) What kind of reasons can I use to request IRS to wave the interest and penalty for fail to file the first
3) Can I send them 1040x form to file the amended income tax return, to include contactor expense there, to offset the missing contractor income (since I never received the 1098-T from my client)?
Thanks very much for your help!
,,how to get the IRS to remove interest after penalty was removed? ,IRS Penalties & Interest on 1040X? ,IRS Penalties & Interest on 1040X? ,IRS sent me extra refund and now wants the money + interest + penalty? ,IRS penalties and Interest for back taxes? ,Tags: 1040X, assessed, contractor, from, Help, Income, interest, Lower, Penalty
Comments (3)
First, consult a professional tax preparer. I get contacted by many people in your situation. They can help you get your penalties and interest down if you get your return corrected properly. Learn the tax laws. Go to IRS.gov and go to Pub. 17. There’s a good start.
You really need to find a tax preparer today because this forum can’t give you all the information you will need to fix this problem this week. A 1098-T is a tuition statement from a college – it’s not an income document. Whether or not your clients issue a 1099 has no bearing on your responsibility to report the income to the IRS and pay self employment tax and income tax. Ignorance of tax law is not an acceptable excuse the IRS accepts when applying to waive the penalties. Sorry. They will tell you that you should have hired a professional. You will need a Schedule C profit or loss from a business and you will need help to fill it out properly. Yes, you will file a 1040x which is an amended tax return and attach the Schedule C and also Schedule SE (self employment tax). I do not suggest a tax chain like H&R Block unless you have what they call a “premium office” in your area (an office open year round which typically only deals with small business returns) or open your phone book and start calling accountants/tax preparers today – it’s busy season for us and I worry that only someone like Block can help you on such short notice. Sorry I can’t give you better news but at this point you need to be face to face with a tax professional to sort this out.
you probably won’t gt it lowered but you may be able to get on a payment plan with them and in the future make sure you make quarterly estimated payments to avoid future penalties – one is due about now