J.K. Lasser Daily Tax Tip brought to you by TaxACT
Copyright 2012 John Wiley & Sons, Inc.
Everyone wants to get as much back in their tax refund as possible, but tax laws are constantly added, changed, or updated. The J.K. Lasser Daily Tax Tip, brought to you by TaxACT, provide some insight into complex tax situations and offers helpful advice and guidance. Now that's something everyone can use! The Daily Tax Tip content is provided by America's all-time best selling tax guide, J.K. Lasser's Your Income Tax Guide by John Wiley & Sons, Inc. Tax advice provided by The Daily Tax Tip shall not be construed as a substitute for the advice obtained or given by a certified tax professional.
Nonbusiness Bad Debt
Mon, 6 Feb 2012 00:00:00 GMT
"If a nonbusiness bad debt became totally worthless in 2011, claim it as a short-term capital loss in Part I of Form 8949. Attach a statement describing the loan, your relationship to the debtor, how you tried to collect it, and why you decided it was worthless."
Accounts and Notes Receivable
Sun, 5 Feb 2012 00:00:00 GMT
"You may claim a bad debt deduction for accounts and notes receivable on unpaid goods or services only if you have included the amount due as gross income. Thus, if a client or customer fails to pay a bill for services rendered, you do not have a deductible bad debt where you have not reported the amount as income."
Selling Before the Security Becomes Worthless
Sat, 4 Feb 2012 00:00:00 GMT
"To claim a deduction for worthless stock or bonds, you must be able to prove that the stock became completely worthless in the year for which you are claiming the deduction. Sometimes you can avoid the problem of proving worthlessness by selling while there is still a market for the security. For example, a company is on the verge of bankruptcy, but in 2011 there is some doubt about the complete worthlessness of its securities. You might sell the securities for whatever you can get for them and claim the loss on the sale. However, if the security became worthless in a prior year, say in 2010, a sale for a nominal sum in 2011 will not give you a deduction for 2011."
Refund Deadline for Worthless Stock
Fri, 3 Feb 2012 00:00:00 GMT
"You can take advantage of a special seven-year statute of limitations to claim a refund due to a worthless security or bad debt. An amended return for the year the security or debt became worthless can be filed within seven years from the date your original return for that year had to be filed, or, if later, within two years from the date you paid the tax. For example, if you have held securities that you learn became worthless in 2004, you still have until April 17, 2012, to file for a refund of 2004 taxes by claiming a deduction for the worthless securities on an amended return (Form 1040X) for 2004."
Copyright 2012 John Wiley & Sons, Inc.
Everyone wants to get as much back in their tax refund as possible, but tax laws are constantly added, changed, or updated. The J.K. Lasser Daily Tax Tip, brought to you by TaxACT, provide some insight into complex tax situations and offers helpful advice and guidance. Now that's something everyone can use! The Daily Tax Tip content is provided by America's all-time best selling tax guide, J.K. Lasser's Your Income Tax Guide by John Wiley & Sons, Inc. Tax advice provided by The Daily Tax Tip shall not be construed as a substitute for the advice obtained or given by a certified tax professional.
Nonbusiness Bad Debt
Mon, 6 Feb 2012 00:00:00 GMT
"If a nonbusiness bad debt became totally worthless in 2011, claim it as a short-term capital loss in Part I of Form 8949. Attach a statement describing the loan, your relationship to the debtor, how you tried to collect it, and why you decided it was worthless."
Accounts and Notes Receivable
Sun, 5 Feb 2012 00:00:00 GMT
"You may claim a bad debt deduction for accounts and notes receivable on unpaid goods or services only if you have included the amount due as gross income. Thus, if a client or customer fails to pay a bill for services rendered, you do not have a deductible bad debt where you have not reported the amount as income."
Selling Before the Security Becomes Worthless
Sat, 4 Feb 2012 00:00:00 GMT
"To claim a deduction for worthless stock or bonds, you must be able to prove that the stock became completely worthless in the year for which you are claiming the deduction. Sometimes you can avoid the problem of proving worthlessness by selling while there is still a market for the security. For example, a company is on the verge of bankruptcy, but in 2011 there is some doubt about the complete worthlessness of its securities. You might sell the securities for whatever you can get for them and claim the loss on the sale. However, if the security became worthless in a prior year, say in 2010, a sale for a nominal sum in 2011 will not give you a deduction for 2011."
Refund Deadline for Worthless Stock
Fri, 3 Feb 2012 00:00:00 GMT
"You can take advantage of a special seven-year statute of limitations to claim a refund due to a worthless security or bad debt. An amended return for the year the security or debt became worthless can be filed within seven years from the date your original return for that year had to be filed, or, if later, within two years from the date you paid the tax. For example, if you have held securities that you learn became worthless in 2004, you still have until April 17, 2012, to file for a refund of 2004 taxes by claiming a deduction for the worthless securities on an amended return (Form 1040X) for 2004."