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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28086
Experience:  Taxes, Immigration, Labor Relations
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Are you responsible for paying taxes on embezzled money even

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Are you responsible for paying taxes on embezzled money even if it is paid back in full through the courts

LEV :

Hi and welcome to Just Answer!

LEV :

Can you clarify if the money was embezzled and repaid in the same year?

Customer:

money taken 2008-2010 paid back in 2010

LEV :

Since the embezzlement is treated as income, the entity that was a subject of embezzlement should report it to the IRS. Thus - you need to report the income in 2008, 2009, 2010 correspondingly. You should have separate form 1099-misc for 2008, 2009, 2010.


The fact of repayment does not affect the reporting requirement.


You may deduct the amount repaid in 2010 on the schedule A as a miscellaneous itemized deduction subject to the 2% adjusted gross income floor limit.

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