I just received a notice from the IRS concerning my 2005 taxes, and I have three questions about what information I need to supply to them to show that the original return was correct as submitted.
- I (stupidly, I guess) included individual dividends on Schedule B that were lumped together in one 1099-DIV from Fidelity. There were also a few other dividends from other
1099-DIV's, but the IRS thinks I left out the Taxable Dividends from the Fidelity 1099-DIV entirely. My total Schedule B part II income DOES match the total from all
1099-DIV's I received.
- Do I need to do anything besides explaining this and listing the dividends from Schedule B which total the amount on the 1099-DIV?
- Interestingly, the Notice points out that I had a slightly smaller amount of Qualified Dividends from the Fidelity 1099-DIV that they note I DID include on my return! [No question here, except are they really that stupid that they can't match my total 1099-DIV's with my Schedule B?]
- They note that I did not list taxable income from a Form
1099-Q. This distribution from a QTP was entirely used for reimbursement to me from tuition paid for my dependent child (in college), and therefore not taxable. I was not aware that I needed to list this amount anywhere in the original return.
- What documentation do I need to include to show that this was the case? Would a statement from the college listing billed items and amounts paid suffice? With the original return, I also filed a Form 8863, Education Credits, claiming the maximum amount for the Lifetime Learning Credit. I did, however, carefully calculate the amount of the education bills I paid which qualified each for the Lifetime Learning Credit and the non-taxable QTP distribution, and I can legitimately claim both (no overlap: no double-dipping).
- In order to head off further trouble, should I explain this in detail if I include the Statement from the college? [I assume I should be polite in the letter and not point out their stupidity, and that my original return was correct.] n.b.: Private college expenses are outrageous. If you are saving for it, you cannot save enough in your lifetime if you have a normal income! Furthermore, the more you save, the less you qualify for grants. Thanks in advance for advice.
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