November 17, 2019 at 3:05 am #4904
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!
sammysenseiNovember 17, 2019 at 2:48 pm #4913
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.November 17, 2019 at 2:57 pm #4916November 17, 2019 at 3:25 pm #4919
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.November 17, 2019 at 6:05 pm #4922November 17, 2019 at 6:17 pm #4924
Thank you! Very helpful.November 17, 2019 at 6:21 pm #4925Alan 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.November 20, 2019 at 6:14 pm #4931
Thanks Alan, good to know.
- You must be logged in to reply to this topic.