Do I have to pay tax on stuff I sell on eBay?

Is there anything I can due to avoid paying capital gains tax on a property I sold? …My accountant tells me I owe the IRS over $20,000. The property was sold on December 1st, 2005. Any advice on stretching out the payments to still earn interest - even if I have the money to pay in full?
Steve, Wilkes-Barre, Pa.

Unfortunately, with the national debt north of $8 trillion and the federal budget adding another $420 billion to that pile this year, the IRS wants its money now.

If you come up short when it comes time to pay your taxes, you can call up the folks at the IRS and try to negotiate a payment plan that gives you more time. But there’s no rule that says they have to agree to do this.

If you do have the money, and delay sending in what you owe without negotiating deferred payment, you’ll owe penalties and interest. You'll owe interest on what you owe at the current rate of 7 percent, along with penalties of .05 percent a month until the tax is paid in full or you hit the 25 percent maximum penalty.

Even if you can't pay one time, it pays to file on time: late filers owe a penalty of 4.5 percent of what they owe for every month they're late for up to five months. The minimum penalty is $100 or 100 percent of what you owe, whichever is smaller.

We suppose if you found an investment that gave you a guaranteed return higher than all these added interest and penalty costs, it might make sense.

And if you find such an investment, please let us know.

If an uncle, citizen of another country, wanted to give me 30,000 dollars. Do I have to pay taxes on it? Does he?
Ben -- New York city

Of all the wonderful things about receiving a gift, the nicest part is that you don’t owe taxes on it.

The so-called “gift tax” – paid by the person giving the money – applies to U.S. citizens who give away more than $11,000 to a single recipient in a calendar year. (If you’re married, you and your spouse can together give $22K tax free to any single recipient. Married couples on the receiving end count as two people, so a couple can receive $22K from any individual.)

For gifts from foreign individuals, you don’t need to report amounts less than $100,000. But if your uncle ever feels that generous in a calendar year, you’ll have to file Form 3250.  And, of course, your uncle may owe taxes to his home country. (For that, he should check with a tax expert there.)

Depending on where your uncle lives, you may also want to check with the U.S. Treasury to make sure he’s not from a country on one of their watch lists. Banks are required to report all such transactions over $10,000 to the Treasury. So if you receive a gift for more than that amount, from someone in a country Uncle Sam doesn’t want you doing business with, the gift could be “blocked.” You can check the “Specially Designated Nationals and Blocked Persons” list on the Treasury’s Web site.

What are the rules for declaring your married child who is a college student your dependent?
Sandra M., Austin, TX

In general, they have to fit the IRS definition of a child, live with you, be a fulltime student under 24, and rely on you for more than half their support.

For details, see Publication 501 on the IRS Web site.

    

MORE FROM ANSWER DESK View the archive Check out answers to earlier reader questions. Or click on a topic below for more specific questions and answers: Accounting 101 Credit and debt Economic explanations Energy enigmas Home sweet home Miscellaneous mysteries On the job Saving and investing Small business Taxes

MORE FROM ANSWER DESK

Answer Desk Section Front

Explaining the oil bust Cash out my 401(K) or hang on? The debt legacy Time to end oil tax breaks? A 401(k) urban legend How low can stocks go? Who made this mess? Where did the money go? Can’t we put the bums away? What's your take on bailout? Answer Desk Section Front   Add Answer Desk headlines to your news reader: