Attaching Notes to Tax Returns

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Kerry M. Kerstetter’s blog, Tax Guru, is a great source of wisdom if you ever have any tax questions and didn’t know who to turn to. I’ve personally sent a question in to Kerry and he answered it both in an email and on his site within a couple days so I can assure you all those questions are real and he’s as knowledgeable, helpful and nice as he seems.

Well today there was an article about someone’s mother looking to give gifts to her children and what the tax rules regarding that. It wasn’t the “impoverishment planning” for Medicaid eligibility that was surprising (or the fact that there planners and experts in the field of “impoverishment planning”), but Kerry recommends that if they do receive a gift that they send a note along with the return explaining that they received a gift and to discount anything that may seem out of place (like a large donation or other tax related item). I had never heard of attaching notes to a return and didn’t think anyone would ever see it if you did attach something.

Anyone ever heard of this?

{ 4 comments, please add your thoughts now! }

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4 Responses to “Attaching Notes to Tax Returns”

  1. Jonathan says:

    I’ve heard it mentioned in several tax articles, but have never done it. (I’ve also never itemized.) Basically, it’s a pre-emptive strike against an audit or their request for “more supporting information”.

  2. ChrisCPA says:

    I frequently attach adittional information to tax returns I file such as supporting statements or summaries that clarify info on the return.

  3. timothylee says:

    Some years ago I went through a divorce. Filing single caused a large payment to the IRS. I wrote a note with explaination as to why I didn’t send quarterly payments. I also send additional info with various stock sales, especially if the company was aquired and the share price changes or is re-issued in the new company. I have never been audited in 45 years. I assume I must be doing something correct.

  4. Dan says:

    Yes, attach notes to support anything that you feel you need to explain. Try to keep it short, and reference the IRS documents/publications that are justification. I’ll attach a sheet where I’ll reference the form and line number, and supporting IRS docs/publications.

    * Schedule E, Line 20: IRS publication xxx states that blah blah, therefore this amount includes… etc etc..
    * 1040, Line 500: Instructions for 1040 state “….”, therefore I am exempt…
    * Schedule YYY: I did not file a Schedule YYY in tax year 2005 because there was no activity as defined in Publication XXX.

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