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Posted by Haskel LaPort on April 5, 2008, 4:04 pm
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> Haskel LaPort wrote:
>>
>>> If you receive a number of paychecks that you do not cash, because
>>> your company has told you to hold on to them (they do not have the
>>> money in the bank) and these paychecks are reported on your W-2 - how
>>> do report the non-receipt of income. The company is now in bankruptcy
>>> and no longer exists.
>>>
>>> Should you report the W-2 as received and write-off the non-receipt of
>>> pay as a bad debt on schedule A?
>>
>> You would record the bad debt on schedule D as a short term loss not as
>> an itemized deduction on Schedle A.
>>
>
> Now I have to disagree with this treatment. The key to the problem is
> that although company issued the checks, they qualified them by saying
> dont cash them yet; or now; or next week, or until we tell you to. And
> they never did.
>
> So when you know a check's no good, you don't have constructive receipt of
> the income.
>
> One way to go would be to prepare a paper return for client listing only
> the verifiable wages on line 7, and verifiable income tax withheld on line
> ... 57 (?) with a statement attachment explaining reasons and the
> situation in full.
>
> Of course if lower wages affected the EIC available..... ???
> What would you do?
Well what would you do if the amount(s) withheld on the paycheck are greater
than the employee's actual tax liability? Did the employer file payroll
returns and remit all taxes? Does it matter from the employee's stand point
if the employer never paid the taxes?
>
> ChEAr$,
> Harlan Lunsford, EA n LA
>
> --
> << ------------------------------------------------------- >>
> << The foregoing was not intended or written to be used, >>
> << nor can it used, for the purpose of avoiding penalties >>
> << that may be imposed upon the taxpayer. >>
> << >>
> << The Charter and the Guidelines for submitting posts >>
> << to this newsgroup as well as our anti-spamming policy >>
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> << Copyright (2007) - All rights reserved. >>
> << ------------------------------------------------------- >>
========================================= MODERATOR'S COMMENT:
- please trim the post to which you are replying
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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