<<I got my 1099 last week, but I haven't studied it for accuracy.>>
This is long, boring and off-topic. You have been warned.
For everyone's sanity and protection, I _strongly_ recommend using a competent finance package (Quicken, Microsoft Money, et al) and posting _all_ of your transactions. Yes, all 3,475 investment transactions that you did last year. IRAs, mutual funds, stocks, bonds, options, futures, the whole enchilada. Especially if you've done silly things like buy and sell "lots" of stock at different times over the past 18 months that you were still holding at year-end. Or did a partial roll-over of an IRA. Or participated in a partnership. Silly things like that can drive you crazy.
Posting all of your transactions can also serve as a useful audit of your friendly neighborhood broker and their easily understandable statements. Brokers and brokerage back offices frequently make mistakes, usually not in your favor.
You may also want to monkey around with which lots you want to consider "sold" to minimize ST capital gains (or to maximize losses if you stayed long in October). Heaven help you if you shorted against the box.
A word of advice from someone who's been there: If you receive a letter from the IRS, >RESPOND TODAY<!! Do _NOT_ dawdle or ignore the letter, even if you have already responded to a previous letter on the same subject. Use registered mail to respond and keep copies of EVERYTHING you send the IRS. Include copies of ALL previous correspondence with each and every letter you send. Keep the original IRS letter (and envelope) in a safe place. Corresponding with the IRS by phone is NOT recommended, but if you do speak to someone from the IRS on the phone or in person, get their name and id number and FOLLOW UP THAT CONVERSATION WITH A LETTER RESTATING EVERYTHING THAT WAS SAID!
If the IRS is asking for a trivial amount of money, it's probably easier and cheaper to ask for a waiver or reduction of penalties and interest and pay that amount ASAP. You may be right and your principles and dignity might be bruised a bit, but cheap is cheap. Fighting the IRS can be expensive and time-consuming. Fighting the IRS is like wrestling a gorilla in his cage. You _might_ win, but it's REALLY going to hurt.
Above all, be COURTEOUS, professional, organized and factual. Overwhelm them with details and documentation. Where appropriate, reference the section of the IRS rules that you feel applies. Note that the IRS doesn't respond well to tantrums and threats. They could give less of a damn that you're the second cousin of Congressman Billy Bob's brother-in-law. |
