The reason I ask this is because we REALLY need the money right now because I am unemployed at the present time due to a sickness. The early withdrawal was for $18,000 and we paid some federal taxes($3700)already. I was just wanting to know if it would be caught right away, and what would happen, or if we would ever get caught? Thanks for replying
2007-01-29 10:10:31 · 13 answers · asked by ScLaDy 1 in Business & Finance ➔ Taxes ➔ United States
Not including the income is a direct route to disaster. The IRS will catch this and you will pay dearly in the form of penalties and interest. Something so blatant will not escape their computer. I would not for a minute even consider not claiming this income. You will be sorry financially later if you don't.
I know taxes always seem to come at a rough time, but it can be rougher once the IRS gets a hold of you. Can lead you to bankruptcy, liens, judgements, etc. that will haunt you for years to come.
Do the right thing and pay now. Good luck.
2007-02-04 14:38:22 · answer #1 · answered by Thoroughbred 2 · 0⤊ 0⤋
well first u may well get some of what they withheld back, and they may not "catch it" for several years after it has had time to rack up substantial penalties and interest....if ur husband is under 591/2 there is a 10% penalty off the top, but the reason that they withhold at 25% (the 3700) is to make sure that enough is withheld to cover the tax and penalty, this should not count toward earned income credit however since it is not earned income....and if your income was not in the higher tax bracket already u very well could be getting a portion of the 3700 back i would strongly encourage u to file it now, it will be noticed and u will have to pay even more....good luck and hope it all gets better soon!!!!!!!!!
2007-02-06 01:23:35 · answer #2 · answered by kay 2 · 0⤊ 0⤋
Talk with a tax professional, but you might be able to file an extension for your return which gets you off the hook until August, I believe. Were you taxed or penalized for the early withdrawal? If so, this might be a credit toward your current tax amount. As far as will you be caught? The first thing the IRS will do is send you a letter. If you efile, your return is less likely to be audited, but be careful. The IRS is not your buddy. Keep good records.
2007-02-05 18:35:33 · answer #3 · answered by Anonymous · 0⤊ 0⤋
If you are trying to avoid paying a little in tax now then you would be foolish to not report this. The IRS is notified on withdrawals immediately. If you had tax taken out, you can not include this then from the 1099R without reporting the income, it's on the same form.
The IRS would most likely catch it at the time of filing, reprocesses your return, and if you had any refund, hold it until you file an amended return.
An audit later will cause SEVERE panalties and fines so I don't suggest hiding this income, now or ever. If you need to make payments, the IRS can do that without adding late fees. This is the best approach to take.
2007-01-29 18:20:43 · answer #4 · answered by Jen 5 · 2⤊ 1⤋
There is a high probability this will be caught by the IRS. I know of only one case where money was taken out and not reported. They will make sure the tax is correct. They will also assess a 10% early withdrawl penalty. If the remaining tax liability is significant they will assess interest and penalties on the tax liability.
2007-01-29 18:18:42 · answer #5 · answered by KingGeorge 5 · 2⤊ 0⤋
You should include it. First off, since you are aware that it's taxable income, and if you fail to include it on your return, it could be determined to be the filing of a fraudulent tax return and you could end up doing hard time to save a couple of bucks. Secondly, just because you properly file your return, doesn't mean that you have to pay them everything they're due. You will only get stuck for the non-payment penalty. Pay them what you can afford. They will contact you shortly and work out a payment plan for the remainder.
2007-02-06 15:31:51 · answer #6 · answered by Scott K 7 · 0⤊ 0⤋
You will definitely get caught. The IRS computers match up the paperwork that they get with the returns, and it will show up and you'll get a letter from them. It might take a week, or it might take a year or more. Then you'll be paying back what you owe plus interest and possible penalties.
It's tax fraud to deliberately leave something off your return. Do you really want to do that? It sounds like you've got troubles enough without adding to them.
Good luck.
2007-01-29 20:26:11 · answer #7 · answered by Judy 7 · 0⤊ 0⤋
Not claiming the tax will be a definite audit and quickly. I would not even try it. They could hold you criminally liable for tax fraud. Forget about the PENALTIES!!
I made a $10 math error and it cost me $50 two months later. I would not even consider doing what you are asking!! From now on you will be on the IRS hot list for audits, why risk it.
Trust me, you will get through your current situation if you keep trying to do your best.
2007-02-02 10:57:40 · answer #8 · answered by plum_oasis 1 · 0⤊ 0⤋
You might get away with it for a year or two but the result is not worth it, you will pay big penalties and interest when they do catch it, then if you cannot pay the entire amount due, they can auction any property you may own. Better to face it now than later....
2007-02-05 11:06:18 · answer #9 · answered by Dennis 3 · 0⤊ 0⤋
You will get a tax notice that will include interest and penalties. You MUST report all your income. When you sign your return you are indicating that everything is correct.
You might not get "caught" right away but you WILL get caught. Report the income!
2007-01-29 18:48:59 · answer #10 · answered by Dizney 5 · 0⤊ 0⤋