Comments on: Score One For The Little Guy.

By: J. Money

J. Money — Mon, 31 Jan 2011 01:11:59 +0000

Thanks again for guest posting Grant! And I am ALL ABOUT saving all this $hit for 7 years too – you just really never know when things are needed randomly. It takes a few seconds to store something away now instead of HOURS and stress down the road. Well done again, my man!

By: The Money Watch

The Money Watch — Fri, 28 Jan 2011 00:24:04 +0000

Glad to hear that things worked out! It won’t be long and I’ll be needing to get my taxes done. . .in a weird way I’m kind of looking forward to it, lol. . .

By: retirebyforty

retirebyforty — Thu, 27 Jan 2011 22:04:36 +0000

The Mrs. keeps everything. If it was up to me, most paper trails would be all gone…
Nice going! Score one for the little guy indeed!

By: Marc

Marc — Thu, 27 Jan 2011 19:02:04 +0000

Glad to hear that you came out on top. Whenever you get a letter from the IRS or a state saying you owe money it is in your best interest to do exactly what you did to show you are correct. I have a relative that works for the IRS doing audits and boy have I heard some stories!

Three years ago my wife and I moved from CA to OR. We owned a home in CA and turned it into a rental since we couldn’t sale it due to the market tanking. Talk about having to do some crazy taxes the year and a half we owned the property after we moved. I had to split the interest paid the first year we moved into when we resided in the property and the remainder of the interest paid when we had it as a rental property. It was crazy as I did this all myself with lots of help from said relative. Going through this process taught me to keep everything to make it easy to access to prove you are right if and when the tax man comes knocking on your door.

By: Donny Gamble

Donny Gamble — Thu, 27 Jan 2011 18:49:54 +0000

The IRS has become stricter than ever with all of their new regulations and guidelines

By: Travis

Travis — Thu, 27 Jan 2011 18:15:12 +0000

Great post, and glad for your happy ending! States are becoming more proactive in their audit proceedures to try to increase revenues to make up for their shortfalls. I see this time and again with my clients, who travel to different states frequently for business.

The burden of proof is always on the taxpayer to determine residency. Like you said, documentation is key. I also caution those who do work in different states throughout the year. Most states now have a “statutory residency” test that you may meet; in other words, you could be a full-time resident of two different states. Usually this means spending over 183 days working in a particular state and maintaining a place of abode (renting an apartment while traveling). Fortunately, resident states usually give you a credit for taxes paid on income to another state.

By: Pete

Pete — Thu, 27 Jan 2011 15:44:47 +0000

I had a similar situation a few year ago albeit for not quite as much money. We got an assessment of taxes in the mail for just under a thousand dollars for taxes owed. It turns out in our instance that we were wrong and the IRS was right because we had forgot to include some unemployment income my wife had made the previous year – thinking it was the year before. We paid up because we knew we were wrong, but I’m glad you figured it out and got out of paying again!

By: Wade

Wade — Thu, 27 Jan 2011 15:43:29 +0000

I for one have lived in the same state for my entire life. I’m not ruling out that I may move out of state, but I believe that if I do that I will be prepared for this situation. “Slug” mentioned the point of keeping documentation for seven years, and I have kept all of my tax information going back that far. I have not on kept my vehicle registrations for each year, but I would hope that type of information would be easy enough to track down.

Anyway, good job on the successful hunt! It proves that hard work does pay off.

By: slug

slug — Thu, 27 Jan 2011 15:18:08 +0000

I guess this is why “they” say to keep 7 years worth of document history. I would expect more of this kind of thing from the states as they face greater budget shortfalls. Yet another reason the FairTax is a better approach.

By: Kevin @ Thousandaire.com

Kevin @ Thousandaire.com — Thu, 27 Jan 2011 14:36:49 +0000

This is terrifying, because I throw everything away. I don’t understand how the burden of proof is on the taxpayer: shouldn’t it be on the government. They can’t just tell me I owe them $7,000 and then take me to jail unless I prove them wrong, can they?