parent with taxable Betterment – need tax returns?

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

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  • #4904
    sammysensei
    Participant

    I have a parent whose retirement funds I am holding in a robo-advisor account in the parent’s name. The amount is close to 80K, but i am now wondering what kind of penalties would be incurred if the parent has not been filing tax returns for a few years. Would it be better to have some funds gifted to me or a family member (15K per year until empty), or should I just leave the account as it is for the moment? Parent has not made more than 12K any given year for at least the last ten years.

    Thanks for any help!

    sammysensei

    #4913
    kaneohe
    Participant

    https://www.irs.gov/newsroom/important-facts-about-filing-late-and-paying-penalties lists the penalties. You may be able to request waiver of penalties if you can create a good story.

    #4916
    kaneohe
    Participant

    If you find that this forum is eating up your long-winded reply and making you do it all over again, then post in small pieces so you only lose a small part of your efforts at a time.

    • This reply was modified 1 year, 10 months ago by kaneohe.
    • This reply was modified 1 year, 10 months ago by kaneohe.
    #4919
    kaneohe
    Participant

    p.6 on this Pub 17 for 2009 gives a chart for when you must file. You can google each yrs Pub 17 to find the thresholds for each yr. The 2019 version suggests you may not need to file if income is 12K and parent is single and not a dependent. Be sure to read the footnotes esp re: SS.

    The thresholds have increased over time so it is possible that earlier filings were required.

    Since income is near threshold and at low rates, leaving account alone might be better than transfer to you and higher rates.

    #4922
    kaneohe
    Participant

    https://www.irs.gov/pub/irs-prior/p17–2009.pdf

    if it works,link to 2009 Pub 17

    doesn’t work so google yourself.

    • This reply was modified 1 year, 10 months ago by kaneohe.
    #4924
    sammysensei
    Participant

    Thank you! Very helpful.

    #4925
    Alan S.
    Participant

    Perhaps an accountant who specializes in “Offers in Compromise” to the IRS would also be able to assess the exposure to those who received gifts of the taxpayer’s assets when it is evident that the purpose of the gifts is to avoid back taxes and penalties. Most likely, if the tax bill is small enough, the IRS would not bother to pursue this, but if the tax bill is small, the taxpayer would be better off determining the amount of back taxes and penalties likely to be levied.

    #4931
    sammysensei
    Participant

    Thanks Alan, good to know.

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