2004 Income Tax Changed Self Employment Tax

[WichitaDM]

I just got a notice from the IRS claiming that i should have paid self employment tax for 2004 (Which i probably should have). I filed as a non proffesional and just listed my income in theother income line. They want me to pay almost 15,000 in self employment tax now and i was wondering if any of you have experience in this area, or know if there is anything i can do to fight this.

I thought that if you filed as a nonproffesional you could avoid paying the Self Employment Tax but i guess not. Any suggestions would be much appreciated.

[molawn2mo]

Form 1040, Page 1 should have reflected gross gambling winnings. Schedule A (itemized deductions) should have reflected your gross losses.

I am afraid sir that the only way to correct this situation is to file amended federal and state tax returns. By amending the tax returns (if done properly) you will not have to respond to the notice. Or you could pay the s/e tax as per the notice but that may be cost prohibitive.

Either way, you will most certainly owe more taxes.

This IRS notice has implications to most state tax returns, too. You may want to engage a professional tax preparer because you may be in for a rude awakening.

There are other factors in making an intelligent decision on how to proceed but that would require a review of your past returns, current returns and a discussion of any monsters that may be under the bed.