Over the years I have had so many clients come to me and say, “I received this letter from the Internal Revenue Service and it says that I did not report ‘all’ my income.” Let’s discuss the Internal Revenue Code, briefly. The Internal Revenue Code is quite literal in its terminology. Therefore, if it uses the word “all,” it really does mean “all.”
Should you work two jobs and get one Form W-2, the “all” means for you to report the other earnings, whether you have a W-2 or not. If you are a sub-contractor and do not receive a Form 1099 from the contractor, you are still obligated to report “all” the earnings from that job. Should you receive no W-2, no 1099, no interest statements, no dividend statements, this does not preclude you from reporting “all” your income. And it is “all” on you to find out what it is.
Heads up: Congress’ favorite word ever is “except.” The use of the word “except” alerts you to the fact that there is an exception to the rule you are currently reading. Generally those exceptions will reference another code section. Because there are exceptions to some rules, the code guides you to the section where the exception is written. If you have ever used tax software that is why they do not provide answers to your direct situation; they provide you with all the possible answers to your situation, because there are so many exceptions. So if you do not recognize the right “drop down,” you could end up somewhere that you did not note the exception.
The Internal Revenue Code is also a dictionary unto itself. Often terms used within a code section may not be clear or may not be of “common use” definitions. Some code sections have specific subsections labeled as “Definitions.” So do not always use your Webster’s dictionary or Google; to get your definition; go to the section that provides the definition to the sub-section. Got it?
Finally, when you see in the Internal Revenue Code “No/None,” it means exactly that. If a code section uses the word “no,” then there are no exceptions, unless of course they are defined.
Always consider getting help from a tax professional that gets training annually.
Alma M Scarborough, proprietor of Scarborough’s Tax Affair, Inc., is an enrolled agent. Email taxhitlady@sbcglobal.net, call 314-621-1402 or visit www.taxhitlady.com.
