have to file?

[ari]

have a 65+ year old client

if i add up her interest and dividends it's around 10k

she has social security of 12k

and she has stock proceeds of 3k (not sure of basis)

direction say if income is under $11,200 she doesn't have to file

.....i'm wondering if i don't file, how would the IRS know if there

was a 0 cap gain or there is a 3k cap gain putting me over the threshold

requiring filing.

basically, when there are proceeds, how does that come into play

in ascertaining the need to file in this situation?

thank you,

ari

[GeorgeM]

I would file a return, especially with the proceeds of 3k it put you over the minimum.

[JohnH]

Filing a return clears the $3k out of the system and starts the SOL clock running. It will save possible CP2000 correspondence in the future and also protect the client against any surprises down the road.

[MsTabbyKats]

If the stock proceeds are $3000...it's all gain until they hear otherwise. You need to do a D.

[Guest Taxed]

If she did NOT have gross proceeds of $3000, and the rest of the facts are the same I would say no need to file. But as others have pointed out to IRS that $3000 is all cap gains and without a Sch D you are looking at a CP2000 if not this year by the end of the 3 yr.

Having said that when you get her cost basis that $3000 may turn out to be a wash or even a loss.

Did she have any Fed witholding from her social security? If yes you got to file no matter what the total income is to get a refund.

[ari]

good info; thank you; this is a good client's Mom; i'm happy to tell her no need to file;

but this year she's going to have to file and i'll explain if no stock sales in the future;

no need to file then...and there is no fwt on soc sec

tks again

[mcb39]

I have one that is nearly ninety and has not filed in years, but, because she sold stocks this year we are going to file a return just for her peace of mind.

[Edward]

IRS SERVICE CENTER ADVICE 200018051 follows:

Gross Income generally means money, goods, and property received that is subject to tax. It does not include nontaxable income (such as tax-exempt interest). For sales of property, gross income for this purpose is the amount realized in excess of basis (Reg. 1.61-6(a)). However, the IRS advises that taxpayers receiving Form 1099-B or other information returns reporting gross proceeds from a sale of property can avoid possible IRS matching notices by filing returns, even when a return is technically not required.

[Joel]

If the broker reported the basis on the 1099-B (box A), as is now required for all newer purchases, then furture filing should not be required!

[Terry D EA]

Just to add my 2 cents worth, the age of the client has no bearing it is the income if any. I am filing the final return for my deceased 102 year old grandmother. Folks in the family had not followed any earlier suggestions and all CD's stock accounts, savings, etc; had to be liquidated for medicaid purposes. I filed all previous years because of income from the CD's stocks; etc, She always fell under the income filing requirement but doing so, we have never heard from the IRS. While I don't like taking client's money for what may seem to be uncessary filings, I view it as an insurance policy. We invest thousands in insurance with the hope that we will never have to use it. Why not treat tax filings the same? Again, just my 2 cents worth.

[mcb39]

I filed mine this morning and my 94 year-old client who is very sharp; was also very happy. She actually ended up with a loss, but the stock sales of over 77,000 shares were documented. It is called peace of mind. And I did it pro bono

[mrichman333]

　

The IRS will use a zero cost basis and treat the 3,000 as all gain.

According to the below statement

1/2 of her SS 6,000 +10,000 + 3000 = 29,000 She has to file

Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2012 or ( one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly).