3 ms·

I've had friends audited for not declaring cents of interest they earned when their landlords placed security deposits in savings accounts...

dawnerd 9y ago
Wonder if there was something else that triggered it. Doesn't seem like it would be worth their time over that little, but then again IRS is kinda weird like that.
- kefka59 9y ago
  yeah, seems very strange. That said banks do report interest income from saving accounts usually. So maybe the total amount from their W2/1099s + interest income didn't match up and that triggered an automatic audit. They probably were in a fairly high income bracket too I imagine.
pishpash 9y ago
I call BS. Anything under 50¢ is rounded down to $0 by IRS's own accounting.
- jkaplowitz 9y ago
  They give taxpayers two rounding options of which a given filing must consistently pick one or the other. The first is to put whole dollar amounts on all the lines on all the forms, and to round those as you say. Even that one doesn't round all intermediate numbers used in calculations, only the lines on the form. The other is to be precise to the penny. Both are allowed by the official instructions, even if software like TurboTax Online always picks the first.
  - pishpash 9y ago
    Pretty sure tax software rounds every entry (that means input data and "worksheet" numbers), not just the numbers on the final forms. Also there are no "intermediate" numbers in tax calculations as each step is always an elementary arithmetic computation (+,-,*,/). However, if you do things by hand there is some ambiguity whenever you have a choice to bundle or unbundle accounts, because if you enter them separately, you've rounded before the sum, but if you enter one total, you are supposed to round after the sum. You can save a buck here and there if you want.
    - jkaplowitz 9y ago
      You don't have a choice about how to do it in many cases, though I think I know the example you mean which is valid. One example of how preliminary numbers (a better phrase than intermediate) aren't rounded would be if someone has three Forms W-2 in a year, such as from three jobs. All three Box 1 amounts are added up unrounded regardless of whether you put a whole dollar wage total on Form 1040. If the three Box 1 amounts end in 35 cents, 40 cents, and 45 cents (just to pick a suitable example), you're going to show an extra buck of wage income than if you could round those cents away. IRS guidance from the 1040 instructions: "You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3. If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total."
all_usernames 9y ago
Tax advisor from Intuit just advised me the other day, "it doesn't matter" if I report a dollar or two of savings interest.
gowld 9y ago
multiple times? I that because the landlord filed a form but the tenant didn't file a form to match?

dawnerd 9y ago

Wonder if there was something else that triggered it. Doesn't seem like it would be worth their time over that little, but then again IRS is kinda weird like that.

kefka59 9y ago
yeah, seems very strange. That said banks do report interest income from saving accounts usually. So maybe the total amount from their W2/1099s + interest income didn't match up and that triggered an automatic audit. They probably were in a fairly high income bracket too I imagine.

pishpash 9y ago

I call BS. Anything under 50¢ is rounded down to $0 by IRS's own accounting.

jkaplowitz 9y ago
They give taxpayers two rounding options of which a given filing must consistently pick one or the other. The first is to put whole dollar amounts on all the lines on all the forms, and to round those as you say. Even that one doesn't round all intermediate numbers used in calculations, only the lines on the form. The other is to be precise to the penny. Both are allowed by the official instructions, even if software like TurboTax Online always picks the first.
- pishpash 9y ago
  Pretty sure tax software rounds every entry (that means input data and "worksheet" numbers), not just the numbers on the final forms. Also there are no "intermediate" numbers in tax calculations as each step is always an elementary arithmetic computation (+,-,*,/). However, if you do things by hand there is some ambiguity whenever you have a choice to bundle or unbundle accounts, because if you enter them separately, you've rounded before the sum, but if you enter one total, you are supposed to round after the sum. You can save a buck here and there if you want.
  - jkaplowitz 9y ago
    You don't have a choice about how to do it in many cases, though I think I know the example you mean which is valid. One example of how preliminary numbers (a better phrase than intermediate) aren't rounded would be if someone has three Forms W-2 in a year, such as from three jobs. All three Box 1 amounts are added up unrounded regardless of whether you put a whole dollar wage total on Form 1040. If the three Box 1 amounts end in 35 cents, 40 cents, and 45 cents (just to pick a suitable example), you're going to show an extra buck of wage income than if you could round those cents away. IRS guidance from the 1040 instructions: "You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3. If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total."

all_usernames 9y ago

Tax advisor from Intuit just advised me the other day, "it doesn't matter" if I report a dollar or two of savings interest.

gowld 9y ago

multiple times? I that because the landlord filed a form but the tenant didn't file a form to match?