Reply To: parent with taxable Betterment – need tax returns?

Home Fairmark Forum Retirement Savings and Benefits parent with taxable Betterment – need tax returns? Reply To: parent with taxable Betterment – need tax returns?

#4908
kaneohe
Participant

Here’s a slightly dated memo on the penalties:
https://www.irs.gov/newsroom/important-facts-about-filing-late-and-paying-penalties

If you have the info,it might be better to just see if the return needed to be filed and to file late if necessary. If you put the funds in your name, the income would probably be taxed at a higher rate.

Your parent (assumed single? and not a dependent?) is probably near threshold on being required to file with 12K income.

The 12K income is less than the threshold for 2019 so no filing required.
The threshold was lower in prior yrs so it is possible that filing was required in prior yrs but since it would be near threshold, the tax would probably be low. I suppose you could ask IRS to waive the penalties if you can create a reasonable cause.

Pub.17 seems to be the easiest to find in older versions like this one
https://www.irs.gov/pub/irs-prior/p17–2009.pdf . In the beginning
of this Publication(in this yr p.6) you will find the chart that tells
you when you need to file.The chart can vary from yr to yr so google each yr and compare w/ income.