I received a letter from the IRS with proposed changes to my 2015 Form 1040. The IRS is claiming I did not report $5,720 in Other Income. I did include this income in W2

[btosti29]

I sent a detailed letter to the IRS explaining where I captured this income; however the IRS responded with the same response I initially received.

[Critter]

Was this income reported on a 1099-misc with the amount in box 7 ?   

Is the IRS saying it should be self employment and you need to pay the SE taxes on it ?  

If you said the amount was supposed to be wages but the employer put it incorrectly on the 1099 then is there a form 8919 ?   <a rel="nofollow" target="_blank" href="https://www.irs.gov/forms-pubs/form-8919-uncollected-social-security-and-medicare-tax-on-wages">http...>

[Hal_Al]

This is a user to user forum. You can probably get help from this forum by providing more detail on what the IRS notice says. To contact TurboTax (TT) support, for help, see:

<a rel="nofollow" target="_blank" href="https://support.turbotax.intuit.com/irs-notice/audit-support/">https://support.turbotax.intuit.com/i... down for more options)

[btosti29]

This income was reported on a 1099-misc with the amount in box 3.  The IRS is stating this income should have been reported in Other Income and that I owe an additional $1,500 in taxes.  My question is even if I incorrectly reported the income under Wages and not Other Income, isn't the income still included in my Taxable Income?  The IRS is claiming my taxable income is incorrect.  Thank you for your help!

[VolvoGirl]

How did you get it on line 7 with wages?

[Hal_Al]

You would think so, but the great American income tax system is too complicated and convoluted for  simple straight forward answers like that. Critter#2 has identified one item: they may be trying to charge you self employment tax. This is usally a problem for a 1099-Misc with an amount in box 7. But the IRS will frequently assume a box 3 amount really belonged in box 7, particularly since you reported it as wages.

Are you eligible for the Earned Income Credit (EIC)? More wages would indicate either more or less EIC depending on where you fall on the EIC curve.

What does the rst of the IRS letter say? They are usually specific about which calculations they used.

[Critter]

If the first response was not accepted then I would amend the return to move the amount from line 7 to line 21 where they expect it ... doing this may change other items on the return so don't be surprised.

Then sent the amended return back with the notice for your new response ...

Click or tap a tax year for specific amending instructions.

·         2016

·         2015

·         2014

·         2013

[dmertz]

The IRS response is not surprising.  Although they will recognize the income was omitted from where it should have been on line 21, they will not recognize that it was reported on line 7 because it is not income that should be on line 7.  Many things depend specifically on the amount on line 7, so, as Critter#2 said, other areas of your tax return can be affected by the change needed to the line 7 amount and the only way to be sure that your tax liability was correctly determined is to prepare an amended 2015 tax return.  The result will be different from what the IRS claims to be you additional tax liability, but it might not be a wash either.

[btosti29]

Thank you all for the responses. I am going to file an amended return and submit to the IRS with my response.

[Critter]

You can report it as other income on Form 1040 line 21. Here's how to enter it in TurboTax.

·         Click the Federal Taxes tab.

·         Click Wages & Income.

·         Click "I'll choose what I work on."

·         On the screen "Your 2014 Income Summary," scroll all the way down to the last section, "Less Common Income."

·         Click the Start or Update button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."

·         On the next screen, "Let's Work on Any Miscellaneous Income," scroll down and click the Start or Update button for the last topic, "Other reportable income."

·         The next screen asks, "Did you receive any other taxable income." Click Yes.

·         On the next screen, "Other Taxable Income," enter a description and the amount. Click Continue.

·         On the next screen click Done.

The income will be reported on Form 1040 line 21 with the description that you entered.