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Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2355
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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I received a class suit settlement of $5,385.16 in 2012,

Customer Question

I received a class suit settlement of $5,385.16 in 2012, which I forgot to include when I filed my tax. IRS and CA sent me a notice about the discrepancy and asked me to pay more tax. This is fine since it was my mistake to begin with. However, what I do not understand is why is this $5,385 counted twice:
Taxable Wages: 5,385
Award: 5,385
Net Difference: $10,770
Is there a mistake?
Submitted: 10 months ago.
Category: Tax
Expert:  Anne replied 10 months ago.

Hi

I'm Anne. I've been preparing taxes for 27 years and I'll be happy to help you.

If $5385 was your total settlement, then that is all you have to include. You may want to take that letter to a professional tax preparer that knows how to deal with those letters so that they can carry the corrections all the way through the letter.

There should be a page that has some boxes you check.........1 box states that you agree with the proposed changes, and if you check that box, then you are agreeing to their changes and they expect you to pay the additional tax they state......don't check that box.

There should also be a box that states that you agree with some of the changes.........don't check that box either

Then there's one that states that you disagree with their findings.......check that box, and write across the bottom of the page that you only received $5385 total.

You will also need to recalculate the the page that shows the additional $ amount owed (and where the professional tax preparer comes in) You will probably have to pay them something, and feel free to shop around for prices in your area........now that the tax offices are open for business, you should be able to find someone that will work with you at a reasonable rate, and help you get this problem resolved quickly.

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