Mailing Tax Returns Questions

[CR86]

I have to mail in my tax returns this year. I prepared them using Turbo Tax and then printed it out.

I have the following questions:

1) For the Federal Tax Return, Turbo Tax tells me to only attach the W2 to the 1040 Form. The package also includes forms 8949 and 8995. I had some non-retirement accounts which contained mutual funds and dividends. The non-retirement account generated a consolidated 1099-DIV, 1099-INT, 1099-MISC, 1099-B. Do I need to attach it to the package? Turbo Tax does not mention it.

2) I had a Crypto Coinbase account which I invested about $120 and lost about $50. Do I need to include that? It doesn't seem to have generated any Tax document.

3) I received a $750 payment from a cousin through PayPal. Do I need to report that? PayPal did generate a 1099-K

4) For the State return,  do I need to attach the 1099-DIV, 1099-INT, 1099-MISC, 1099-B?

5) My wife is a nonresident alien and I filed Married Filing Separately option (I don't want to use Married Filing Jointly or ITIN because the process is very tedious and requires mailing her original passport). I entered "999-88-9999" to get through the "validation" to print out the returns. Do I white out the "999-88-9999" on both the Federal and State returns and then write "NRA"? Can I just strikethrough instead of using white out?

6) In the State return, it asks for my Spouse's name. It is strange Turbo Tax did not fill this in automatically. Should I write her name or leave it blank?

[DianeW777 · Accepted solution]

The answers are posted below in the order of your questions.

1- All tax forms (1040, 8949, 8995, etc and schedules (A, B, C, D, etc)  must be mailed with your tax return (Form 1040) as well as any document that has federal withholding plus a W-2 with or without federal withholding. Income reporting forms such as 1099-DIV, 1099-INT, 1099-MISC, 1099-B do not get mailed unless they do have federal withholding.

2- Yes, you must report your virtual currency transactions on your tax return even though you did not receive a reporting document from the company. This is considered a sale of an investment and you will select:

• Investment Income > Stocks, Mutual Funds, Bonds, Other > answer No you did not receive a 1099-B and I'll type it myself > Continue

3- Companies have received new reporting rules that require they report to the IRS any sales or cash transactions that equal or exceed $600. This means you are issued the Form 1099-K and the IRS receives a copy as well.

• IRS General FAQs on Payment Card and Third Party Network Transactions

A payment from your cousin would not constitute income or require you to report it as income if it was a gift or loan.  If you sold something to your cousin and you made a profit or gain then this might be a sale of personal property.  A gain would be taxable but a loss would not be allowed if it was personal use property that was sold.

4- The state return is handled the same as the federal return, do not attach the documents you received that reported your income to you except the W-2 and any document that has state tax withholding.

5- Yes, you need to enter NRA and it's really best if you white out any number you may have entered that is not a valid number. The IRS may get confused.

6- If the state interview is asking for the spouse name you should enter it.  States have so many different requirements than the federal and it's possible some information is removed because of the nature of the state return.

[CR86]

Thank you so much for the clarifications!

I have one additional question:

The PayPal payment was from my sister in law who lives in a foreign country to me (we both have PayPal). It was a gift to me. Since PayPal generated a 1099-K.....do I need to report that since it was a gift?

[ThomasM125]

The gift is not taxable since gifts in general are not taxable, so you don't need to report it on your tax return. If the total of all your gifts in under $100,000, you don't need to report the gift on form 3530 Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.

[CR86]

Thank you very much!