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According to the IRS have I been reporting "income" incorrectly?

Oak Park, IL |

In the IRS publication "IRS Processing Codes and Information" for 2013, (Document 6209, available online from the IRS website) in "Section 2 - Tax Returns and Forms" there in a table listing all the returns and forms from the IRS (pg. 25). In this table each return and form has a Tax Class listed with a code numbered 0-9 for each class. The Tax Class numbers identify the type of return or form used. These Tax Class numbers are explained in "Section 4 - Document Locator Number" under their "2 DLN Composition" (pg. 61-62). For W2's, W4's, and 1099's the tax classes are listed as "5", but 1040's are listed as tax class "2".

The tax class "5" is identified as "Information Return Processing (IRP), Estate and Gift Tax", but tax class "2" is identified as "Individual Income Tax, Fiduciary Income Tax, Partnership return". Note: I ask that you verify the information I've presented before responding to my question. Document 6209 is available online from the IRS website. According to the IRS's own handbook for processing returns have I been reporting estate and gift tax information (W2 and 1099) erroneously as income on my IRS 1040's? Addendum 9-30-2013: I ask this question in order to determine my legal obligation to report "taxable income" correctly as it relates to the income reported on a W2 or 1099 form so I would not risk perjury when I sign an IRS 1040 return.

Attorney Answers 3

  1. Best answer

    The document you refer to is for Official (IRS) use only. The codes listed in the document are not intended to create obligations on taxpayers to report information on certain returns. W-2 forms are forms used by employers to report wages and taxes withheld to the IRS and other taxing authorities. The wages reported thereon are clearly income and have nothing to do with Estate or Gift taxes. Information on 1099's usually relate to possible taxable income. Estate and Gift tax returns report gifts made during lifetime and inheritances and other property transferred as a result of someone's death. If you receive a gift from someone, it is not income for income tax purposes the donor, not you, is responsible for filing a gift tax return if one is due and paying any tax if the gift generates a tax. As far as estate tax is concerned the executor or administrator of the estate is usually responsible for filing any estate tax return that might be required. An estate, including life insurance, would usually have to be worth in excess of $5 million dollars for and estate tax return to be required. There are other situations where an estate tax return may be advisable. If you are worried about whether you are reporting all of the income required on your tax return you should discuss that with a tax attorney or with a highly qualified CPA

  2. Your question is far too complex to answer in this simple online forum. You should consult with a tax accountant or CPA.

  3. I agree with attorney Goldstein. You question is too specific for this Q & A forum. Talk to a tax attorney or a CPA.

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