IRS will help in cases of hardship

Published online on Monday, Oct. 19, 2009

Last Thursday's final deadline for filing 2008 taxes brought a flurry of questions:

Question: Am I still responsible for my back taxes if the VA (Veterans Affairs) has declared me 100% disabled?

Answer: Yes, you are still responsible. But in January, the IRS began providing additional help to people struggling to meet their tax obligations. With so many people facing financial difficulties, the IRS is taking additional steps to help people who owe back taxes.

Depending on the hardship circumstances, taxpayers may be able to adjust payments for back taxes, avoid defaulting on payment agreements or possibly defer collection action.

Anyone who gets behind on tax payments and needs assistance should contact the phone number(s) listed on their IRS correspondence.

If you don't have your IRS notice, call (800) 829-1040 weekdays from 7 a.m. to 10 p.m. Good luck with your situation.

Regarding gift taxes: I understand I can gift a person up to $13,000 a year and both of us will not be taxed. Does the amount have to be one lump sum or can a person give several amounts totaling $13,000? Also, how do I report it on my income tax form? Does the IRS need verification, such as copies of the transaction?

You are correct that you can usually give up to the annual exclusion amount each year to another person -- or to as many individuals as you want -- without having to file a gift tax return. In 2009, the annual exclusion is $13,000 and it applies whether the gifts are given in a lump sum or as multiple gifts.

Neither the giver nor the receiver reports the gift(s) on their federal income tax return. That's because gifts to individuals are not deductible by the giver and are generally not taxable to the receiver.

It is a good idea to formalize large gifts and document it. This could include written statements and other records.