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Questions Answered by Eric Steven Day
2 Answers | Asked in Employment Law and Tax Law for New York on
Q: Told my employer an IRS debt was settled, she deducted my pay anyway. Now I’m receiving refunds. Was that legal?

This happened during the shutdown so I assume they hadn’t processed anything. I insisted that it had been settled. She just responded with “we will deduct it from the following 6 pay periods, if you want to speak to them go ahead”

Im currently receiving refund checks, but it’s... Read more »

Eric Steven Day
Eric Steven Day answered on Jun 20, 2019

When the IRS requests a wage garnishment from the employer, they are obligated to follow it or they will receive punishment. Even if your employer believed you, they will not be able to discontinue the wage garnishment without the IRS notifying them.

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1 Answer | Asked in Tax Law for Texas on
Q: If I believe my boss is skimming money from his business, who would I report this to? The IRS?
Eric Steven Day
Eric Steven Day answered on Dec 5, 2018

You could report this to the IRS if he is not reporting all the income he is making to the IRS for tax purposes. The IRS has a whistleblower program, where you can turn in individuals or businesses for evading taxes and take a percentage of whatever the IRS is going to collect from the taxpayer.... Read more »

2 Answers | Asked in Tax Law for New York on
Q: Can you go to jail for tax evasion?
Eric Steven Day
Eric Steven Day answered on Dec 5, 2018

Yes, it is possible to go to prison for tax evasion. Tax fraud is punishable by prison time.

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2 Answers | Asked in Tax Law for California on
Q: What happens if I get a tax audit? Do I have to go to court?
Eric Steven Day
Eric Steven Day answered on Dec 5, 2018

You would only go to court if you weren't able to agree on the audit determination through the initial audit or through the appeals process. Even then, if you were to petition the tax court, it is very unlikely that you would go all the way to the court for a trial.

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3 Answers | Asked in Tax Law for Ohio on
Q: Can you go to jail for filing an incorrect number on your business's tax returns if it was an honest mistake?
Eric Steven Day
Eric Steven Day answered on Dec 5, 2018

You will not go to jail for filing your tax returns with an "honest" mistake on them. In order for you to serve time in prison for an incorrect tax return, the IRS would have to prove that you committed tax fraud. Tax fraud is only proven when the IRS can show that you INTENDED to defraud the... Read more »

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1 Answer | Asked in Tax Law for Massachusetts on
Q: My daughter received a settlement from a personal injury lawsuit when she was a minor. We put it in a trust for her.

Will she have to pay taxes on it when she is able to access it at age 18?

Eric Steven Day
Eric Steven Day answered on Oct 29, 2018

If the awarded damages were the result of physical injury, then she will not have to pay any taxes related to the judgment award. The only time you will have to pay taxes on the judgment is if there is any part of the judgment that is related to non-physical type pain and suffering damages. (ie.... Read more »

3 Answers | Asked in Personal Injury for Nevada on
Q: I got whiplash as a result of a rear-end accident. Can I sue for pain and suffering?
Eric Steven Day
Eric Steven Day answered on Oct 25, 2018

Yes, you will have to retain an attorney to file a complaint against the individual driving the other car. However, you will need to get the treatment needed as soon as possible and probably wait until treatment is done in order to know what the value of your case is before filing the Complaint.

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1 Answer | Asked in Tax Law for California on
Q: Capital Gains tax on living in new home 9 months or less.

We are almost finished building a home in the Monterey, CA area. My husband's job may force us to move out of the area within 6-9 months. If we make a gain on selling our home of $200k having only lived in it 6 months, with the tax exclusion for a move, how much in Capital Gains would we have to... Read more »

Eric Steven Day
Eric Steven Day answered on Oct 17, 2018

You will still be able to take the exemption from gain on the sale of a personal residence under certain circumstances. It's called the 50 mile rule. If the location of the new job is 50 miles or further away you will be able to take the exclusion of the 2-year rule and the entire transaction... Read more »

1 Answer | Asked in Business Law and Tax Law on
Q: Taxation of an LLC owned by non USA residents

Hi,

two foreigners I mean non USA residents or citizens formed an LLC in the USA, managed by a manager third person non USA resident and citizen as well. they issued an international EIN for the LLC in order to open a Bank account outside the USA. For the first two years the LLC will not... Read more »

Eric Steven Day
Eric Steven Day answered on Oct 15, 2018

If the income is earned within the U.S., the taxpayers always have to file a US tax return to pay taxes on the income that they generate in the U.S. They may also have to file the income in the foreign country that they reside in, but they will likely get a credit for any income taxes that they... Read more »

1 Answer | Asked in Tax Law for Florida on
Q: Will I have to pay additional tax and do I have to pay the 20% tax now on a beneficiary 401k

My dad died at 78 and he had and I was the benificery of his 401K but didnt find out till 5 years later. I am on SSI and I need the money to pay my property tax and pay for my wooden fence that was damage due to Hurricane Irma. The money in the 401K was a little over 5000.00 it was left into his... Read more »

Eric Steven Day
Eric Steven Day answered on Oct 9, 2018

When you withdraw funds from an inherited IRA, the money is subject to income tax to the beneficiary that withdraws the IRA. However, you should not be required to pay the 10% penalty for the early withdrawal of these funds. Therefore, the first 10% withholding would be a good idea in case you... Read more »

3 Answers | Asked in Tax Law for Hawaii on
Q: Would the IRS call me and tell me that I need to make arrangements to pay monies that I owe?

I was told that they had documents for my arrest which they would hold off if I make payments.

Eric Steven Day
Eric Steven Day answered on Sep 18, 2018

If the IRS has called you and indicated that they are coming to arrest you, this is just a scam and you should ignore the call. They are just trying to get some money out of you. The IRS starts the process of collecting on individuals by sending out mail correspondence.

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1 Answer | Asked in Tax Law for Florida on
Q: What's the penalty for not filing taxes on time?
Eric Steven Day
Eric Steven Day answered on Sep 7, 2018

The failure to file penalty with the IRS is 5% of the unpaid taxes for each month or part of the month that the return is late up to a maximum of 25%. If you don’t owe the IRS anything, then there is no penalty for filing late, but if you wait too long you may not be able to get a refund. If... Read more »

1 Answer | Asked in Tax Law for Michigan on
Q: I have a parent that wants to pay my loans of in one lump sum. Is it possible to avoid Gift Tax on the excess over 15k?

I know the allowable amount for a gift is up to 15k, but after that what happens? is it taxed, by how much, and is it avoidable?

Eric Steven Day
Eric Steven Day answered on Aug 28, 2018

You can avoid paying any tax, but you will be required to file a gift tax return, Form 709, along with your normal 1040 tax return you file annually. When you pay more than the 15K allotted for individuals to gift on an annual basis, you have to file the Form 709 to record the excess gift.... Read more »

1 Answer | Asked in Tax Law for Tennessee on
Q: Need help filing Taxes for past 3 years, and best way to get help???

I work for the state of Tennessee and for 5 months no fed taxeswere being held out of my payroll. Due to my deductions being changed in the computer. I was told it was my fault and they weren’t liable. I have not filed taxes in 3 years. I also have had a part time job that has paid pretty well.... Read more »

Eric Steven Day
Eric Steven Day answered on Aug 27, 2018

We can help you get your taxes filed and deal with some of the penalties depending on your filing history. Just give us a call.

2 Answers | Asked in Tax Law for Colorado on
Q: What kind of deduction can I take on rental property improvements?
Eric Steven Day
Eric Steven Day answered on Aug 23, 2018

The IRS recently came out with some regulations indicating that if you were doing work on a piece of rental property and the invoice for that work was $2,500 or less, you wouldn't have to do the analysis as to whether that was considered a repair or an improvement. You could always consider it a... Read more »

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1 Answer | Asked in Tax Law for Massachusetts on
Q: I read it's illegal to file separate taxes if I'm married - is that true?
Eric Steven Day
Eric Steven Day answered on Aug 17, 2018

It's not illegal to file separate, if you file Married Filing Separately. You would just need to indicate who the spouse is on the return that is filed. There are some rules that you would also need to follow when filing separately, so make sure you file under the guidance of a tax professional.

1 Answer | Asked in Tax Law for Arkansas on
Q: If I am tax exempt with capital loss outweighing my ordinary income, do I still get money back at the end of the year?

Example: Ordinary income,12k. Capital loss, 24k.

Eric Steven Day
Eric Steven Day answered on Aug 11, 2018

You can only use Capital Losses to offset capital gains. If you don’t have any capital gains, you can write off $3,000 per year until you either have enough capital gains to offset the remaining loss or you exhaust the whole capital loss using the $3,000 per year. In your example only $3,000 of... Read more »

2 Answers | Asked in Tax Law for Texas on
Q: I work in Kuwait (military contractor) I had to open a salary account & filled out a W9. Will I get a 1099 from the IRS?

I work for UMUC Europe and we fall under a sponsorship company to work in Kuwait. The Kuwaiti bank require us to fill out a W9 when we open our mandatory salary account. What impact will filling out that W9 have on me this tax year? Will that foreign income be reported to the IRS?

Eric Steven Day
Eric Steven Day answered on Jul 31, 2018

When a company requires you to fill out a W-9, they typically have you fill out the W-9 so that they have your information to file a 1099 with the IRS for the income that they paid to you. This will affect you for tax purposes because whatever is recorded on the filed 1099 is what you should be... Read more »

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1 Answer | Asked in Business Law and Tax Law for Indiana on
Q: May I prepare I financial statement without a CPA license? Can you show he Indiana Code that supports your answer?
Eric Steven Day
Eric Steven Day answered on Jul 26, 2018

I am not an Indiana Attorney, but generally anybody can prepare a financial statement for their business. Where you would need the licensing is if you were preparing financial statements for a publicly traded company or you were Auditing those financial statements.

2 Answers | Asked in Criminal Law, Divorce, Family Law and Tax Law for California on
Q: My ex husband filed jointly the year we were in the process of divorce. I assume he ucollected the full refund amount

Update: I'm not getting a clear answer on this. I only recently (a month ago) found the paperwork. The check should have been reissued in both names "and." How is it the check was cashed or deposited into an account that was solely his, without my signature or knowledge? So what you're saying is,... Read more »

Eric Steven Day
Eric Steven Day answered on Jul 21, 2018

If anything can be done, it would have to be taken care of through the court holding jurisdiction over the court. The IRS just issues the correct refund. They are not going to be aware of your pending divorce decree.

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