| jaiye |
| (old hand) |
| 02/02/07 05:50 PM |
Any tax professionals on here?
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I was awarded social security disability this year. I recieved my 1099 from SS in the form it includes the amount that was paid directly to my lawyer $5300 as income to me although I never saw that amount as it was paid directly to the lawyer. Because of this amount I will owe IRS $500 and the state of MO $1000. I only file short form because I don't have enough deductions to claim. Is there anyway to be able not to have to claim what was paid directly to the attorney as income for me? Thank you in advance for any advise.
| Gecko |
| (Carpal \'Tunnel) |
| 02/02/07 07:18 PM |
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Re: Any tax professionals on here?
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Is there anyway to be able not to have to claim what was paid directly to the attorney as income for me?
---> No. It would be NO different than if you have received it then paid it to the attorney.
---> BUT...you can write off the attorney's fees as an expense because it is income related.
| jaiye |
| (old hand) |
| 02/02/07 08:51 PM |
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Re: Any tax professionals on here?
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I see it as entirely different because I never saw the money. And gee whiz IRS will get paid income tax twice on the same money. Even alimony is a direct credit on the payors tax and I would think something like this should be treated the same way since it was paid direct to them and never passed through my hand. Oh well, I guess this is just another example of the inadquency of our tax system since I don't have enough deductions for it to help much.
| AnneB |
| (Carpal \'Tunnel) |
| 02/02/07 09:00 PM |
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Re: Any tax professionals on here?
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I am guessing that your lawyer worked with you on a contingency fee basis. So that was income to you--you just had to give it to your lawyer for his fees. You may be surprised if you are low income that the deduction will help you if you itemize.
Paying your lawyer a fee is no different than paying any other expense. Otherwise, everyone could just have all their expenses deducted directly from their pay and have zero income.
This situation is similar to debt forgiveness. You don't actually get that money the year it is counted as income because you got the money in a prior year (in the form of a loan) and are not being required to repay it.
| Gecko |
| (Carpal \'Tunnel) |
| 02/03/07 12:57 AM |
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Re: Any tax professionals on here?
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I see it as entirely different because I never saw the money.
---> Fine...then when you get audited by the IRS and end up with penalities and interest for NOT reporting the money as income...do NOT come crying to me.
And gee whiz IRS will get paid income tax twice on the same money.
---> They get more than just twice. You get a $400 paycheck...not only is it "income" for you...it comes FROM the "income" (say $1,000) the company you worked for...and they will be taxed. Then you turn around and spend $200 for rent, $75 for utilities and $50 for food. ALL of that is "income" for someone else...will pay taxes on it and who will pay THEIR employers who will ALSO pay taxes on it.
Even alimony is a direct credit on the payors tax
---> Yes it is...AFTER it is reported as income.
---> FIRST you take ALL your income (lines 7 through 21) and enter it on line 22 for TOTAL INCOME. Then on line 31a, you would enter the amount of alimony paid and THEN it gets SUBTRACTED.