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Received w2 as a part of lawsuit settlement and same amount as 1099-misc
- Thread starter curiousv
- Start date
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not2cleverRed
Obvious Observer
I strongly suggest that you wait until she returns to the US and signs it herself.
LdiJ
Senior Member
I am suggesting that you not only wait until she returns to the US and signs it herself, but also has it reviewed by a tax professional as well.
Well I have power of attorney ...and I can send a copy to IRS along with 1040x ...can I sign instead of her ...and next to my sign ...write POA ?
Can you suggest where and how to find Tax professional ..those free aarp tax aide are not helpful when we have complicated questions...
Taxing Matters
Overtaxed Member
No, you cannot sign the amended return for her. A Form 1040-X is a type of income tax return; specifically an adjustment to a previously filed income tax return. When it comes to income tax returns (Form 1040 series returns) the rules for allowing an agent of the taxpayer to sign the return in place of the taxpayer are more limited than with other kinds of returns. The rules that apply for income tax returns are found in Treas. Reg. § 1.6012-1(a)(5). It allows an agent to sign an income tax return for the taxpayer if one of the following conditions are met:
• the taxpayer is unable to sign the return because of disease or injury;
• the return is being filed by the due date of the return and the taxpayer will have been out of the country continously for at least the 60 days prior to the due date (this one applies only to the filing of the original return, of course); or
• the taxpayer requests permission in writing for filing of the return by an agent from “the district director for the internal revenue district in which is located the legal residence or principal place of business of the person liable for the making of the return, and such district director determines that good cause exists for permitting the return to be so made.”
• the return is being filed by the due date of the return and the taxpayer will have been out of the country continously for at least the 60 days prior to the due date (this one applies only to the filing of the original return, of course); or
• the taxpayer requests permission in writing for filing of the return by an agent from “the district director for the internal revenue district in which is located the legal residence or principal place of business of the person liable for the making of the return, and such district director determines that good cause exists for permitting the return to be so made.”
That last one is archaic since the IRS has not had district directors for about 20 years or so; the IRS likely has designated some other official for this, but the process for seeking out the permission and getting a response is likely to take more time than if you just wait for her to return. Moreover, you haven’t indicated anything that suggests good cause for having an agent do this over her simply filing the return.
No matter which of the three conditions are met the agent must attach a power of attorney (e.g. Form 2848) and that authorization must specifically authorize the agent to sign returns. It cannot be inferred from some more general power like a power to handle all financial affairs of the taxpayer.
Thus, you’d basically need for her to be unable herself to sign due to disease or injury and have a power of attorney that expressly authorizes you to file on her behalf. Merely being out of the country won’t cut it.
Taxing Matters
Overtaxed Member
Tax professionals are generally enrolled agents, tax CPAs, tax attorneys, and to a more limited extent, paid tax preparers authorized by the IRS. You likely don't need a tax attorney for this (and I say that as a tax attorney myself). I’d think an enrolled agent or tax CPA would be a good way to go.
Well I prepared amended 1040x for both 2014 and 2015 and I removed self employed income because we got W2 (I repeat she got cash and less than min. wage because employer refused to provide w2 and pay her officially. and she wanted to be abide by laws so she decided declare as self employment income and pay taxes) Even thought it was not a self employment income.
So correct me if I am wrong on amending 2014 and 2015 returns with removing self employment income.
Further I am thinking I should distribute this total income of 21500 in to two parts and assign equal part to 2014 and 2015 ...because she worked for same amount of time in 2014 as well as 2015...(last 3 months of 2014 and first 3 months of 2015) ...
Since you are a lawyer..what is your suggestion on this? I understand that if I file 2017 return without reflecting this income ...IRS may send a notice but can I give an explanation that I distributed this income where it belongs (2014 and 2015 via 1040x)
I understand that I consult tax professional like you mentioned but what I am worried that ...even after paying them good money for their time...they might end up saying ...oh sorry you dont have any other way to save on taxes...you have to treat it as 2017 income and pay taxes accordingly ...there is no other way...
LdiJ
Senior Member
You have already been told that because the income was received in 2017 it has to go on the 2017 return. You cannot put it on the 2014 and 2015 returns.
You really need to have a tax professional handling these things. Otherwise you are going to mess your friend up.
not2cleverRed
Obvious Observer
And this is why you wait until she gets back and signs it herself.
Furthermore, you need to go to someone who know what they're doing, because it's clear that's not you.
Doing things your way is going to cause more problems.
Taxing Matters
Overtaxed Member
I’m not quite clear on what you are trying to do. But understand this: the income is included on her return for the year the income is RECEIVED, not the year that she worked. So if she worked in 2014 but the employer did not pay her for it until 2017 after the lawsuit, that income is taxed in 2017 because that is the year the income was received. And thus that is the proper year for the employer to issue the W-2 and 1099, too. As we have told you about the lawsuit, the 1099 income merely needs to be reported on line 21 of the 2017 return as it was not self-employment income, and that will get it reported properly.
And that is what they should tell you for the money she received in 2017. That is included on her 2017 return and there is no way you can move that back to 2014 and 2015. You will just cause her a ton of trouble (and potentially penalties too) if you try to do that. Like it or not, what the employer paid her in 2017 as a result of the lawsuit is included in her 2017 income and thus goes on her 2017 return.
Whatever she actually received in 2014 and 2015 gets reported on those returns, respectively. If what you want to do is correct those returns to change the income she received from the employer in those years to wage income rather than self-employment income, that you can do, but the 2014 amended return would have to be filed by April 15, and it needs her signature, so you’d need to work out some way to get her the Form 1040-X to sign it and then get it back to file it before that deadline passes if she wants to get a refund from it.
Just Blue
Senior Member
No..OP needs a CPA.
Zigner
Senior Member, Non-Attorney
Actually, some unnamed elderly lady needs a CPA (or Tax Pro, or whatever).
Ohiogal
Queen Bee
A tax pro is someone who did a two week training at H&R block and is not a CPA. Elderly lady needs a CPA. Not a cut rate low class tax pro.
Just Blue
Senior Member
Zigner
Senior Member, Non-Attorney
I agree that the OP needs someone who knows what they're doing. That may end up being a CPA, but there are "tax pros" who are more than "cut rate" tax pros.
