Have a Tax Question? Ask a Tax Expert
Hi from just answer. I'm PDtax, and saw your question reposting. I can assist, but do not want to infringe upon the work of another expert.
I am responding since you seem pretty stressed. Please give the previous expert time to assist, or opt her out and I will assist.
If you opt the other expert out, I will help you right now.
I don't believe you have the original expert all the information needed originally. You want to amend prior year returns to deduct losses for fees you never received. You may not like my answer, but confirm the facts before responding.
If you were reporting income on a schedule C, most report on the cash basis. Which means that money you did not earn was not reported. An example:
Fees collected: $50,000. Fees earned but not collected $23,000. Expenses $45,000.
Taxable income on schedule C, cash basis is $5,000.
The unearned fees have no tax basis yet. If you never collect them, you do not have a tax loss.
The original responses you received did not have that key information.
Please confirm I understand your fact pattern completely.
You have a claim for unpaid commissions. You never paid tax on there income, so there is no tax loss for not receiving them.
Your remedy is in litigation. If you prevail, and receive any payment, chances are income tax will be due.
I don't doubt that you are owed money. I don't doubt that this troubles you. But you do not get to deduct a loss for income you never paid tax on.
Because this is unpaid wages, you might have had other remedies, such as state labor and wage board, or even forcing the business into bankruptcy. Those steps could have forced the legal system to intercede, and perhaps fierce payment to you of some of your unpaid commissions. The issue with any of those claims is the amount of time that has passed.
I am sorry that my answer does not support tax return relief. But you seemed to urgently want a response.
Thanks for asking at just answer. Even though my answer was not a positive one, I would appreciate positive feedback to close out your question. I'm PDtax.
Will you be accepting my offer of a phone call to discuss? Please advise.
I am positive that I know of no creative tax deduction to help.
Your remedies were legal, as I discussed. And time may not be available to pursue legal claims. But there is no tax deduction for a loss when you did not pay tax on the income.
Thanks again from just answer. Please rate my assistance when we have completed our work. I'm PDtax.
The difference if you would have reported the income when earned, not when the cash was received. Later, when the income was not collected, you could write off the uncollected income.
I answered this morning because your question seemed urgent. We spent all morning debating my opinion of your issue. I hope that the time was well spent.
I am taking a lunch, and have afternoon appointments. If you need anything more, please get back to me shortly. If we are done, I would appreciate positive feedback.
Hi again. PDtax here.
I had a chance to look back in, and see that you have not responded.
Thanks you for the opportunity to be of service.
Positive feedback will be appreciated.