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lwpat
lwpat, Attorney
Category: Legal
Satisfied Customers: 25386
Experience:  Actively practicing trial attorney
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in 2005 I left the insurance industry and stopped making sales. I did receive renewal inc

Customer Question

in 2005 I left the insurance industry and stopped making sales. I did receive renewal income from previous sales. I received no income from new sales from 2005 to current.I reciently received notification from IRS modifying my tax return to show income from renewals as taxable as self employed income and as such I needed to pay self employment tax on that income (social security) I know that according to IRS code, self employment tax is not imposed on renewal income and have seen the code. I cannot find it however.
can you help me ?
Submitted: 5 years ago.
Category: Legal
Expert:  lwpat replied 5 years ago.
Thank you for your question and for using JA. Please click accept so I will receive credit from JA for my time.

To my knowledge there is no such regulation that would exempt your renewal income. They are commissions plain and simple and commissions are income subject to self employment taxes.
Customer: replied 5 years ago.
Relist: Inaccurate answer.
Customer: replied 5 years ago.
I have read the code. It is very sepecfic that renewal income is treated like dividend income and it taxed as such. I have read the code.
Expert:  lwpat replied 5 years ago.
Can you give me the citation to that part of the code.
Thanks
Customer: replied 5 years ago.
I will try and give that information to you I know it specifically references renewal income from insurance sales and the treatment of such income.
Expert:  lwpat replied 5 years ago.
Thanks
Customer: replied 5 years ago.

confused, are you the expert, the one who knows my answer the one I paid money to so I could get the answer I was looking for to my question.

Expert:  lwpat replied 5 years ago.
You paid a deposit but have not been actually charged. I know of no such provision in the code that states that such renewals are dividends and that I agree with the IRS determination. However, considering the complexity of the tax code, we could both be wrong. You may want to repost your question in the tax category. You will still be able to use your deposit and that is faster than me trying to transfer you.
Customer: replied 5 years ago.

your misunderstanding is that the renewals are dividends. the statute states that the renewals are taxed the same as deividends or as unearned income ie: rental income

etc.

Expert:  lwpat replied 5 years ago.
I understand but I have been unable to locate that in the regulations.
Customer: replied 5 years ago.
that is ok, I understand that it is a large tax code, I do not know where to go to read it and put in specific words to find the regulation. that is why I thought your experience in the legal phrasing would make it easier for you. I am not satifsfied with the results I have had with your firm. I looked for over an hour and your response was maby 10 minutes so there you have it.
Expert:  lwpat replied 5 years ago.
You can repost in the actual tax forum and get a better response.