Monday, September 07, 2009

Questions for the Tax Lady: September 7th, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: I recently received a settlement through mitigation. Is this money is going to be considered taxable income.

Yes, it will most likely be taxable income. The only settlements that you do not need to claim as income are those resulting from a physical injury. Therefore, any awards for discrimination, emotional distress, etc., should be considered income. Likewise, if you receive any settlement from a contractual dispute then it will also need to be reported on your income tax return.

I highly recommend speaking with a tax professional if you recently received a settlement and are confused about how to report it to the IRS.

Question #2: I need to get a copy of my tax return from last year for a home loan, but I cannot find it anywhere. Is it possible to get a copy from the IRS?

Yes. If you need to get a photocopy, or computer transcript, of your last tax return you can get it from the IRS for free. Just call 800-829-1040 or file Form 4506-T (Request for Transcript of Tax Return) with the IRS. Additionally, if you need an actual copy of a processed return then you will need to file IRS Form 4506 (Request for Copy of Tax Form) and pay a $57 fee.

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