|
 |
 |
 » From: Brooklyn, NY Dear TaxMama: I am 21 and had a job shampooing off the books. I was never paid with checks, recipts or paystubs. I recieved about $5,000 total in 2001 and the records indicate my previous employer said I made $21,000. The IRS says now I must pay the tax on that large amount when I did not make it. Shouldn't the business have to show proof? They said no. Thank you Suzanne Dear Suzanne, You reported the $5,000 you received on your tax return right? You didn't? No kidding. Now you expect IRS to believe YOU when you say you're telling the truth? Let me think about this? A business that files tax returns and keeps books. Or Someone who they already know committed tax fraud. Who would you believe? Put yourself in IRS's shoes. If you had reported the income the earned on your own tax return, you have a strong basis on which to build a case. If you never did, well, you may need to prove you never got paid that much. That's going to take quite some work, since you didn't keep records and you probably just cashed the checks you got without even depositing them in your bank account, right? Sure, you could win your case. (I often do.) But you'll have to build it first. You're going to need to seek out a good, NY Tax Pro, who is experienced with fighting these case with IRS. I wouldn't try to do this one on my own if I were starting from a position of not having reported the income in the first place. You'll have to weigh the cost of this battle, though. Find out what IRS wants to charge, including penalties and interest. Then, have your Tax Pro compute how much you will owe NY for their tax bill (yes, they will get a copy of the record and send you a bill, too). Compare that to the cost of the Tax Pro's fee. Which is lower? Add to that the fact that if you let IRS decide that you have unreported income in one year, you can surely expect them to look at all the other years that still open under the statute of limitations. So, you may end up with three years just like this one. OK, this is the WORST case. It could turn out to be easy and IRS will believe you if you simply say you never received that money. But, don't hold your breath. If you need a referral to someone in NY, let me know and I'll ask my Tax Pro team who is able to handle this case. Good luck! Best wishes, Eva Rosenberg Your TaxMama [Note: Turns out, she was paid in cash. Has no records. Sure, she really needs to take responsibility for the taxes due on the $5,000. BUT, she is being badly mistreated by an employer who was should have put her on payroll. There is a way out. I will find her a NY tax pro to help. Of course, she'll have to pay their fee. Why do I bring this up? At age 21, I expect ALL of you know better than to believe it when someone tells you that your earnings are not taxable. And NEVER, NEVER work 'under the table'. It generally turns out costing you more than you ever imagined.]  |
 |
 |
 |
 |