Hello. In general, my income
is not high enough to owe taxes
. For four years I held on to a gas royalty check for a considerable sum (enough to have to pay income tax), having it re-issued each year, until cashing it in 2012. As a result, the gas company issued 1099's showing that income each year, as if I received that income 4 times, instead of once. The IRS
now believes that I owe more taxes than I do and is asking for my returns
for those years. My understanding is that I was to declare that income the first year, when I first received the check. However, I believe it would actually work out better for me to declare it for 2012, when I actually cashed the check. Do I have a choice? If so, which year should I declare the royalty income? What would be the best way to handle this? How do I go about getting new, corrected 1099's? It is my understanding that 3-year income averaging (which would benefit
me) has been disallowed since 1980's...is this correct? I believe I need to revise previous years' returns, and have yet to file 2012 (asked for extension
). Thank you for your attention and assistance.