Posted on 04/22/2018 12:37:24 PM PDT by lee martell
Remember that song by Tom Jones; "I who have nothing!". That pretty much describes me. I'm near 62 y/o, working part time. I hope to keep working at least for the next eight to ten years, then start taking my Social Security.
I have no savings to speak of. I will always owe the IRS something from unpaid student loans or wrongly filed tax statements. Most times I don't receive any return at all, it's simply 'absorbed' and paid out to the Govt. The one bright spot is that due to a sibling's death last year, I have received about $20.000 from her estate. More should be coming later this year.
My question is, is there anyway to protect that inherited sum of money, to safeguard it, in case the govt. gets tired of waiting for the scheduled payout. I know from experience that the IRS has the ability to go to my bank at any time, and scoop out all that it contains, if they choose to do so. It has happened before, and I've never forgotten the shock.
Some online searches to that question advise setting up a retirement plan. I currently don't have one. Are there short term retirement plans that would allow me excess to my principal without incurring an Early Withdrawal 'punishment' fee? Could I renew such a plan after a few years have passed?
If it matters, I'm a Navy veteran. My next stop would be to ask someone at the Navy hospital to refer me to an advisor. Most people think they know, but have limited knowledge. I want to do things above board, no tricks. But I don't like the notion of being fully vulnerable to the mercies of the tax collection system.
That is exactly correct.
A filing is required for estates with combined gross assets and prior taxable gifts exceeding $1,500,000 in 2004 - 2005; $2,000,000 in 2006 - 2008; $3,500,000 for decedents dying in 2009; and $5,000,000 or more for decedent's dying in 2010 and 2011 (note: there are special rules for decedents dying in 2010); $5,120,000 in 2012, $5,250,000 in 2013, $5,340,000 in 2014, $5,430,000 in 2015, $5,450,000 in 2016, $5,490,000 in 2017, and $11,180,000 in 2018.
Unless there is fraud, then there is no statute of limitations.
Even in the fraud cases I have worked on over the years, the IRS still only went back 3 yrs for audits.
“I am a CPA with almost 40 years experience. Actually was a tax law professor at a large university years ago.. retired now but still do IRS Audits and Tax Court Cases.”
Then you should know that you gave bad advice on the IRS statute of limitations.
The ten year period of for starting the legal actions to recover owed taxes.
Additionally, if there is fraud, a willful attempt to evade taxes or missing return there is no time limit.
“...so I will wait until the full amount has been paid out before I ask for more specifics.”
If you’re one of the beneficiaries on an annuity or insurance policy, make sure the company has your correct address as they will want to mail you disbursement forms. YOU will be filling the form out for your disbursement, not your sister. You will also choose on these forms HOW you want the money disbursed.
There’s also the possibility that the investment stopped earning what it was earning upon you sister’s death. It could’ve been a high-flying stock account until then, but bumped over to money market rates (which are lousy).
The investment company will hound you with forms...only if they have your correct address.
“I started taking SS at 63 and haven’t regretted it. I am 71”
At 63 you received approximately 85% of your full benefit you would have received at age 65.
However, you received that 85% for 2 years or 170%. 170% divided by the 15% you gave up means that you would have had to collect at the age 65 benefit rate for approximately 11.3 years or age 76.3 before you collected the same amount of money you gave up. That is with no time value for the money.
Smart move to collect early.
I am also a CPA with over 40 years experience. Tired is correct about statute of limitations being 10 years. However if lien recorded on real estate, the lien would last beyond 10 years depending on state law.
There are many possible ansewers to this question. Facts like how old debt is, whether disclaiming inheritance is wise, using offer in compromise, whether he has home that needs repair, etc.
The 4% was taken out PRIOR to me getting anything. I first had to petition the county court to become the administrator of my fathers estate.
I then had to get a special pin number from the IRS to create an account at the bank. After selling his house, the money was placed into this special account. Then I had to pay all his creditors and outstanding bills from the account. When one year passed, the state of Pennsylvania allowed the remaining balance in the estate to be paid out to the heirs.
I’ve won many cases over the years on this exact issue....
Just had two of them this tax season. Easier to work around than fight. We just filed an extension on one as they were near the 10 year limit and will file the return as soon as it expires. No need to let them keep the refund.
I just recently settled a $115,000 balance due for a client from 2012 individual return by fighting it in Federal Bankruptcy Court. Settled it for $1,500 without going to court. Much easier to win there than Tax Court.
“I am also a CPA with over 40 years experience. Tired is correct about statute of limitations being 10 years. “
Here is his statement:
“Statute of limitations on taxes owed is 10 years from the due date of the return or the date filed, whichever is later.”
True if they don’t pursue legal action OR if there is fraud, intent to skip out on your taxes or missing return.
“76.3”
I retired at 63 also...and figured I’d be right at 77 to break even. Also figured I’d probably be gone shortly thereafter, so I decided to take the time up front.
Never regretted it.
You could put it in crypto currency (BitCoin, Bitcash, etc.). They don’t have a way to seize wealth kept that way as long as they don’t have your key. That doesn’t mean you don’t owe them. It just means they can’t take it without you giving it to them. It is perfectly legal to buy crypto currency.
“However if lien recorded on real estate, the lien would last beyond 10 years depending on state law.”
Not sure about the 10 year lien rule. Doesn’t sound right. I would fight it after doing case research. The 10 year rule is by statute. They can’t enforce a lien on a debt not owed.
Had one client where the IRS accidentally left the lien expire.. usually 5 year renewals required. Client sold the real property and the IRS was pissed but could do nothing.
The inheritors don’t pay taxes. The decedent does. If the assets are other than cash, your basis is the value upon transfer.
MOST people are way, way under the limit. $20k doesn’t come close.
The estate would need to be more than a million. But you should spend $200 and sit down with a lawyer just to verify.
Set up a trust casts about $1,200.
If he has existing tax bills, he should be thrilled to pay them.
And we should be thrilled that he is paying them too.
I have to pay my taxes. Why shouldn’t he? Minimizing a tax bill is fine. But you owe what you owe.
That’s expensive, depending on the amount to be held under trust.
For that amount of money, no one is really going to look. If you want to not pay your taxes, buy gold or bitcoin. You can unload both anonymously. Anything else and the IRS will seize it for the unpaid tax bill.
ALWAYS PAY YOUR TAXES! You do not want them combing through your business.
There are exceptions to the 10 year period for bankruptcies, installment agreements, statute extensions, offers in compromise..... I never had one in 40 years.
Hate to say it, but the collection agents are so overworked that they don’t have time to chase after the old items. Field audit is even worse. My friends who work at the IRS can’t wait to retire and most already have. (I used to teach tax law programs with the IRS in several regions)
CID is really getting bigger and much more aggressive. They carry guns and work undercover doing sting operations, often in drug rings and organized crime task forces. We invite them to our annual tax updates to hear the interesting stories.
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