We received a letter from IRS regarding the Tax Year 2022. The tax bill they sent is $79,000 including penalty and interests.
There are 3 items that they are disputing. We used TurboTax to do the taxes ourselves
1. Forgot to report a 1099-INT from Marcus for $144.50 - Not a big item.
2. They are counting Rollover to ROTH of $6000 as distribution -
3. We transferred my son's 529 from Vanguard to College Advantage which they are counting as a distribution of $24,888
4. This one is the biggest issue. DH exercised RSU worth $182,900. After selling some shares to cover taxes, he received shares worth $131,446. We sold the shares 2 days later with proceeds of $133,090 resulting in capital gains of $1,643. The RSUs were handled by ETrade (now Morgan Stanley). The taxes were deducted by the Employer. Etrade sent a 1099-B to IRS where they say that our gains were $133,090. And that is causing the large tax bill with taxes and penalty/interest.
All of the above items should not generate a tax increase except for Item#1. How do we proceed? We have all the supporting documents that shows that the Tax was deducted by the employer and 529 plan was rolled over
Do we amend the tax return?
How to inform IRS about this?
Any tips or suggestions? (This is our first time receiving this kind of IRS letter)
There are 3 items that they are disputing. We used TurboTax to do the taxes ourselves
1. Forgot to report a 1099-INT from Marcus for $144.50 - Not a big item.
2. They are counting Rollover to ROTH of $6000 as distribution -
3. We transferred my son's 529 from Vanguard to College Advantage which they are counting as a distribution of $24,888
4. This one is the biggest issue. DH exercised RSU worth $182,900. After selling some shares to cover taxes, he received shares worth $131,446. We sold the shares 2 days later with proceeds of $133,090 resulting in capital gains of $1,643. The RSUs were handled by ETrade (now Morgan Stanley). The taxes were deducted by the Employer. Etrade sent a 1099-B to IRS where they say that our gains were $133,090. And that is causing the large tax bill with taxes and penalty/interest.
All of the above items should not generate a tax increase except for Item#1. How do we proceed? We have all the supporting documents that shows that the Tax was deducted by the employer and 529 plan was rolled over
Do we amend the tax return?
How to inform IRS about this?
Any tips or suggestions? (This is our first time receiving this kind of IRS letter)
Statistics: Posted by luckybamboo — Fri Jul 19, 2024 4:41 pm — Replies 27 — Views 3042