You are responsible to report
any interest income on your tax return. Your bank is normally only obligated
to send you an interest statement if the interest amount is over $10.
However, this does not mean that you are not obligated to report your
interest if it is less than $10 or if your bank did not send you a statement
at the end of the year. If you received a statement as a nominee of
the interest received, the Internal Revenue Service will hold you
responsible to report this income on your tax return or name you as the
owner of such interest income if you don't file the proper paperwork to let
them know who is the real owner. You should not just choose whomever you
want as the owner of this interest income, because the person to whom you
report the interest income will be obligated to report it on their own tax
return if they have a filing requirement.
Another basic income item that
that you need to know about in this course is unemployment compensation. You
must report on your tax return unemployment
compensation that you receive that is the total unemployment
compensation paid to you in 2014.
It was good while it lasted.
Unemployment compensation was taxable only if the amount was over $2,400.
This meant that anything up to $2,400 was completely tax free. Qualifying
for unemployment compensation has always been due to contributions to a
government unemployment compensation fund program usually through your state
employment development department. Please do not include as supplemental
unemployment compensation received from a company-financed fund but rather
include them as wages subject to tax withholding and possibly subject to
social security and Medicare taxes.
Many changes have occurred since Congress enacted
the first income tax law. In 1862, Congress enacted the nation's first
income tax law in order to support the Civil War effort.
It was in 1862 that the office
of Commissioner of the Internal Revenue was established. This individual was
given the power to enforce the tax laws. There has not been too much change
to this power to now.
The Act of 1862 established the office of the
Commissioner of Internal Revenue. The Commissioner was given the power to
assess taxes, to enforce the tax laws through seizure of property and income
and prosecution and to levy and collect taxes.
Many individuals have tried to
influence these new tax laws. Many times the tax laws were changed and
amendments issued to make the tax laws a permanent component of our daily
life. Taxes are here to stay and will be raised as the need arises for more
money.
The fact remains that the powers and authority of
the office of Commissioner of Internal Revenue remain very much the same
today.
However, today the taxpayer seems to have more
power due to social media and the knowledge and advice inseminated by others
through the internet. Those books with titles such as "How To Beat the IRS"
are real and they offer much advice on how to win your case against the IRS. Some
people call these dirty attorney tricks. Regardless of what they are called
they still provide guidance and information on Internal Revenue loopholes.
