FREQUENT
IRS MATTERS:
Q: If I receive a notice from the IRS and they are charging me interest on an underpayment, how do I back into the interest? If the IRS owes me money, will they pay me interest on my overpayment?
A: To approximate the interest you can expect to pay or receive from the
IRS please click the following link. This document indicates the
interest rates used by the IRS for both underpayments and
overpayments:
http://www.irs.gov/pub/irs-pdf/n746.pdf
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Q: What is the earned income tax, what income is taxed, what
is exempt, and other related questions.
A: Select the following link for various local earned
income tax topics:
http://www.hab-inc.com/content/ifr.htm
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The IRS Mission is to provide America's taxpayers top quality
service by helping them understand and meet their tax
responsibilities and by applying the tax law with integrity and
fairness to all. Below is a link to a document that outlines the IRS
Examination Process.
View: IRS
Examination Process
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FREQUENT STATE OF PENNSYLVANIA MATTERS:
Q: Why is Pennsylvania taxing me on retirement income?
A: Generally, the PA Department of Revenue does not tax retirement income (social security benefits, pensions, annuities, 401k, IRA distributions, and related). But, when PA income tax is erroneously withheld on income tax was previously taxed, PA automatically presumes that the income is taxable. It is recommended and suggested that PA income tax not be withheld on any retirement distribution unless previously advised by a tax professional.
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Q: Why is Pennsylvania sending me a notice requesting a paper copy of my W-2 form as it related to my PA-40 filing?
A: In many cases, electronically filed returns should transmit all information as it appears on your W-2 form. It is possible that some or all of this information did not transmit properly to PA and a paper copy of the W-2. Not withstanding many other possible reasons why a paper copy of your W-2 is requested, it is common that when withholdings on your W-2 exceed the current year Pennsylvania personal income tax rate, PA will request a copy of the W-2. Additionally, PA will also require a letter from your employer verifying that the PA withholding amount was correct.
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Q: Why did I receive an underpayment penalty notice from PA?
A: The PA Department of Revenue requires that all individual taxpayers make quarterly estimated tax payments on or before the due dates (April 15, June 15, Sept 15, Jan 15) for taxable income in excess of $8,000 received during the year that is not subject to PA withholding (generally all income other than wages).
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Q: Why is PA requesting a copy of my out of state return?
A: In many cases, electronically filed returns should transmit all information as it appears on your out of state return. It is possible that some or all of this information did not transmit properly to PA. In such instances, PA merely requests a signed and dated copy of the out of state(s) return in order to process your return and for you to receive all proper out of state tax credits.
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