I think that you can claim yourself regardless of how much money you make. You don't have to file a tax return if you make less than $8750, unless you want to get your withholding back.
Probably he isn't a sleazeball. He may have had C's electronic signature from past returns and he may have just been going on what her mother & stepfather told him. She should definitely notify the CPA. If he knows that C is filing for herself and hasn't lived with or been supported by those people then he can't ethically or legally do the same thing this year. And, as others have said, C needs to notify the IRS of the possible fraud that has been perpetrated. The IRS really does not like people who falsify their taxes (as her mother and stepfather did).
Biz, I may have the wrong form #, but whatever form shows earned income . . . ? Or should she have had something showing how much was withdrawn? She had not withdrawn anything . . only her mother had withdrawn from it in 2006. C did not have control of the fund in 2006. Is that what you meant? BTW - nice chatting w/ you again
Thanks, Magdalen!!! Well, we are thinking . . . he is going on what info he was given. I am talking to C on IM and we are both reading all the posts here, LOL, and we think the advice to write a letter to the CPA is exactly what she must do. And we are thinking she needs to do what Biz said and contact IRS and get the "amended" forms. C has not gotten one penny from her mom and s/dad - ever! They used her money out of her trust fund for anything ever purchased for her (and evidently - stuff for themselves, as well). C started working at age 16 and bought all her own clothing, personal items, entertainment money . . . even tho her mom was taking money out (wh/ we cannot attach to any purchases used for C) And she left home at 18 and has not lived there since. But oh well. That is water under the bridge. We are just concerned w/ stopping the nefarious behavior- and straightening out her credit and trying to build things for the future. Just scary to think they have messed around w/ the IRS. One just doesn't do that.
1099 is the correct form number, this is the amount the brokerage firm states was directed to the person, "usually" as income. This gets tricky for tax purposes, as it is up to the "accounting" to detail what was "principal", and what was a "gain". But, the point is this form basically tells what was taken out of the account in 2006. My question was, did "C" see this (actual) money in any way? C should also request copies of previous years tax returns from the IRS, there is a charge, but the information may be valuable for this situation. P.S. Nice chatting w/ you again as well.
Well, once again my ignorance leaves me w/ no answer . . . as I saw nothing that identified principal as opposed to gain. But then - maybe I just didn't know what I was looking at, LOL (well, obviously I didn't!!!!) We will do as you suggested and get the back copies of the tax forms. As always, your suggestions are very appreciated! Wish I had info I could share w/ you . . . and feel I had in some way thanked you (and all the others who have been so generous!).
If your parents claim you, there are limits on claiming yourself. But if you had withholding you should file the form.
You won't see anything marked on the 1099 form, this is left up to the individual to determine for themselves. But...(a stretch here for tax purposes) IF the account balance was below the "original" invested amount ($100K??), THEN I would say this is a "principal withdrawal" which is not subject to income tax. I would at least designate the 1099 amount as "principal" for tax pruposes. Getting the prior year tax forms will let C know how the accountant designated withdrawals from the trust account. BTW, the account should have copies of the returns as well. C may want to ask him for copies, since she was on them, she has a legal right to copies.
Hedwig is correct here, if C's parents claimed her as a dependent, then she cannot claim herself as one. A dependent can only be claimed once (except for disabilities,etc.).
Hey everyone. I'm going to try and explain what is going on... I have called the IRS and they say that I did the right thing by claiming as an independent for 2006 because I support myself for over half of my expenses AND I have lived on my own for at least 1/2 year(it's been over 4). They said it doesn't matter how much money you make if you meet these requirements. Then I got in touch with another lady because I was told that my parents filing for me was fraudulent b/c they did so without my permission, knowledge, or signature. She said that what they did is fraud and I can file charges using a special form on the website. She also confirmed to me that in July of 07' they amended my taxes and paid the debt they created by sending in a check of around $250.00 b/c I had already claimed my refund. I'm now in the process of getting copies of all the tax transcripts to find out exactly what they filed for. With the help of Ani and everyone on this board I've been able to muddle my way through this, thank you so much! I feel so empowered and proud that I'm standing up for myself. I hope I have made everything clear...I have a hard time conveying what has transpired sometimes.
Update First of all, thank you all for your support. I have learned so much through this forum. And Guydertech - nice to know I have not overstayed my welcome here -I have worried about that - wearing everyone out w/ questions! This has all been quite confusing for C, as even the terminology - such as deduction and exemption - has been part of a learning curve - a lot for someone to comprehend, especially when combined w/ the emotional aspects of suddenly realizing she has once again been "used." As advised, C called the IRS today to see about securing copies of her amended tax return. However, as one can imagine, the agents were eager to find out more about the situation. Here is what I understand at this point. This is second hand from C, but she did record the conversation, LOL, so I will listen to it when we are together again. It is unclear to me as to whether or not C's parents were actually audited. C's mother used the word "flagged," wh/ to me means their return was questioned and to me, means audited, but maybe it was something informal. C's understanding is - to remediate the debt her parents owed the IRS, they amended C's tax return, year 2006, and claimed her as a deduction. There was some statement the agent made about adding "debt, along w/ that deduction." The agent said her parents had to write out a check to the IRS, but it sounds like claiming C and the "newly found debt" (whatever that was!!!) lowered their tax debt. We have no idea if they were slapped w/ penalties, etc. C forgot to ask for a copy of her taxes, as she was quickly switched to agents and they were asking her questions - and she did not really even understand the terminology. However, she did understand that Yes, the tax return she submitted was changed (amended) by her mother and s/dad, and that they had claimed her on their taxes for 2006. The agents were trying to get to the bottom of things and asked her if she had proof she had known nothing about this change, and she said well, just the emails from her mother, and that she had not signed any other tax returns. The agent told her that amended tax returns cannot be submitted electronically, so the BS about their using her signature "on file" does not stand up. Now I have not heard the conversation, so if that is not correct, it could be that the agent said the forms were not submitted electronically, thus the argument for their using an electronic signature was a moot point. But that aside, either way you look at it, C did not sign, nor did she give her permission for anyone to submit, an amended tax return on her behalf for 2006. Another point I do not understand is . . . C did not give them a copy of her tax return, nor copies of her W-2's, so how did they get that in their hands? C called the IRS back to request copies of her tax returns, wh/ cost $39 ea, and they said would probably arrive in about 60 days. They also asked her is she wanted a copy of "the transcript" and she didn't know what to say - so I told her to call back and say, yes, she wanted that, too. (I have since figured out - this must just be the data input from C's originally filed tax return). As has been suggested, C is going to write to the CPA who engineered this mess and advise that she has not agreed to allow her mother to claim her and furthermore, wants copies of the amended tax return that he filled out w/o her permission, LOL. I didn't know how aggressive to be about this. Any suggestions? This is the old South we are talking about, so as soon as the CPA gets that letter, a phone call will be made to C's mother. I don't know if that matters or not . . . as far as familial relations, I am certain it does not matter to C. She feels good about holding everyone accountable. So your thoughts, please.
LOL - didn't know C had posted! Well, between our two posts, hope you all can advise what to do next. I worry that I am giving C the wrong advice. Thank you so much! Ani
First of all, you aren't asking too many questions. That's what everyone is here for. I suspect that a lot of people have learned a lot of things from this thread. Now, as to how C's parents got copies of her returns. It sounds like Mom is very good at pretending she is C. She has C's social. She may have even made it sound like they're supporting her and needed to make sure how she filed to keep everything straight. She should fill out whatever the IRS wants her to fill out to charge her mother and step-father with fraud. And she should tell them about all the withdrawals over the years from the trust fund, etc. See, there is a 3-year SOL for the IRS to audit returns (three years from due date or date filed, whichever is later). HOWEVER (and I probably can't stress this enough) if they can prove FRAUD, there is NO STATUTE OF LIMITATIONS. Meaning the IRS can go back all those years. And how fast do you think some records are going to materialize when the IRS starts visiting brokers and CPAs? She should ask the IRS if there is a way for her to get copies (or access to the records) in case she wants to sue mom & step-dad. I think she also needs to write to the CPA, as biz suggested. So she gets aggressive. So what? So he calls mom. So what? Their house of cards is hopefully starting to crumble. Even if C doesn't get any money out of the deal, she will at least know that she has shown her parents that she will stand up for herself, and they should never try these stunts again. If she sues them and they ever get anything, it will be hers. Oh, and by the way, sometimes the IRS pays a percentage of what they recover on something like this to the person who reported it. She should ask. Better a little money than nothing. And who has the best chance of getting it? You bet--the IRS.
When I called to get copies of the returns they said it's going to cost $39 each. So I have to pay for my original filing and the amended return as well. I'll be sending off for those ASAP
I agree that you can't claim yourself if someone else has already claimed you. But, there's no minimum limit of wages below which you cannot claim yourself. C.'s mother saying that is just so much BS.
Usually around about June or July the IRS starts sending out letters telling people that they disagree with something they've done on their tax return and advising them about additional tax and penalties. Usually people have 30 days to respond. It'd not an audit. You have the option of agreeing with the IRS and paying whatever tax and penalties or you can file an amended return to ameliorate some of it or you can dispute the IRS' interpretation.
As a former IRS employee, your mother is in deep doo doo. What your mother did was to remove your right to take yourself as a personal exemption on your tax return. This is a very common scenario of what she did and that was why your were questioned closely by the IRS agents: When you filed your tax return, you filed on your tax return as single and took a personal exemption of about 3k for 2006 on your tax return. Because you make a nominal amount of money, you only received a nominal tax refund. When mother and step daddy filed, they filed a tax return using you as a dependent. What this did for them is to reduce their overall taxable income. At the IRS, two separate returns were filed at the same service center which claimed you as and exemption. This caused an auto-audit of the return with the greater benefit (your mom) A letter was sent to your mother advising her that the dependant, you, had been claimed by one or two other people. Mom, being smart cookie, devious, but smart, called the IRS, and passed disclosure, she then requested a â??transcriptâ? of your tax return and if as smart as I think, had the agent fax it to her while she was on the phone. That way the address of mailing would be a non-issue. Upon receipt of the tax return, mom filed an amended tax return 1040X removing your personal exemption, and this caused you to owe a nominal amount. She then waited for the system to catch up to her machinations, and submitted a written answer to the IRS stating that you had mistakenly taken the exemption and that her return was correct. The IRS, upon receiving her payment for your, mistake (sarcasm), let this go and the return was all but forgotten. The implication of your motherâ??s actions: She more than likely signed the tax return with a forged signature, (this is a major no-no for the IRS) Remember, people go to jail for tax evasion and other sundry activities on a tax return. She removed your claim of independence. This eliminated the possibility of your qualifying for federal grants based on your own income. You, poor student, would receive assistance, Mom, with assets and over 75k in income, you have take out loans. She is also too immersed in your affairs. Trust me, I find that the people who will take advantage of you are always the ones who are closest. Like dear old mom. As an aside, for the broker account, you can request from the IRS, copies of the 1099-DIVIDEND. This will give you a good idea of how the account was vested. As a matter of fact, request a transcript of all income documents for the last five years.
A copy is good, but a transcript is cheap and fast Call the IRS and request a transcript of your tax returns along with any income documents such as W-2 and 1099's. This can be faxed to you within 48 hours or mailed to you within 2 weeks.
