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October 18, 2019
Question

IRS informed me I have $6000.-Income that I did not report .

  • October 18, 2019
  • 1 reply
  • 0 views

8962  shows incorrect AGI @ 39189 + 10858 = $ 50,850

 

**. LSE - SSDI  $39189- $6000 ( Atty fees ) =$ 33,189.00

      $10,838.00. Pension

 

***. Corrected AGI  $33,189 +  $10,858 = $ 44,047

 

I've been audited can I still amend to show description 

of amount in box 3   ?

 

suggestions ? ?  - thanks paula holden

    1 reply

    Critter
    Employee
    October 18, 2019

    You are to enter the  SS benefits reported in box 5 of the form SSA-1099 ... you should not have reduced that amount by anything including attorney fees which is the error the IRS has caught and corrected.  

    https://secure.ssa.gov/apps10/poms/images/SSA1/G-SSA-1099-SM-1.pdf

     

     

    On a personal return (1040) legal fees are generally not deductible. The two exceptions are for legal fees incurred to determine or collect any tax liability, and legal fees expended to secure taxable income.

     

    Therefore, legal fees can be deducted to the extent Social Security income is taxable. For instance, if 50% of Social Security income is taxable, then 50% of legal fees are deductible.

     

    To deduct legal expenses, you must have enough itemized deductions (ie. Medical, mortgage interest, property taxes, charitable giving, ect) to exceed your Standard Deduction. If you itemize, your deduction is limited to the extent that it exceeds 2% of your Adjusted Gross Income.

     

    So, you may not gain a tax benefit for this deduction.

     

    To report legal fees in TurboTax:

     

    • Click My Account (Top right of your screen).

    • Select Tools.

    • In the pop up window, select Topic Search.

    • In the search bar, type in legal expenses, deduction

    • Highlight it and select GO, and follow the prompts.

     

    However, new law changes impact deductibility of certain personal legal fees. Attorney's fees that have been deductible (for 2017 and earlier years) as a miscellaneous itemized deduction subject to the 2%-of-AGI floor will no longer be deductible at all starting in 2018 - 2025.