How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15580
Experience:  15years with H & R Block. Divisional leader, Instructor
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

Tax Question: Background: Living in California and working

This answer was rated:

Tax Question:

Living in California and working for a local Company, we were recruited to Maryland and started employment on June 2013. This required us to submit tax filings as part year residence for both States.

We owned a house in California and listed in June however buyer wasn’t able to close until October. We had purchased this home at $798,000 and sold it for $669,000. We accepted the lost of equity on this home, as the new position increased our base pay by 25% and employer agreed to match the prior employers bonus program that we were walking away from.

Due to the lack of equity, we pulled our 401K funds to cover the equity requirements for a new home and some expenses. We paid the base tax due of 20%, age of 59 and job transfer we were not required to pay penalties or additional fees.

This new position as stated came with a base increase of 25%, guarantee bonus of 40% of the base, pro-rated for the year and profit sharing. After being employed for 6 months the company released me. The company offered severance pay of 4.8 months, which included cobra, out placement services, legal fees, etc.

We did review this with our legal counsel and requested the company to pay as promise the guaranteed bonus and profit sharing. They refused to make any adjustments and we could not afford the funds for legal courts. It was also noted that if we went forward with legal actions, it could cause companies to not make future job offers, as this would be of public record.

Please note that this job offered and the choice to accepted was base on receiving these funds to cover our 401K taxes and out of pocket expenses of a new home.

The funds from the 401K increased our total income for the 2013 tax year and the percentages of deductions on gross.

Question – Accepting this business position base on guarantee salary, bonus and profit sharing but having the employer failed to pay the debt. Does that allow us to write this lost of income against our taxes. We would not have taken this position without this being guaranteed and this was negotiated with the company recruiter in accepting this position. We see this as an expense of employment and lost of income.

We presently have a tax liability due as additional taxes for the total income including the 401K that we can’t pay due to lost of employment and lost of guarantee pay from the company.


Robin D :

Hello and thank you for using Just Answer,

Robin D :

Your situation is unfair. Unfortunately, you would not be allowed a loss against your taxes based on those reasons.

Robin D :

the distribution form the 401K and the resulting unemployment would not be relevant for any deductions in tax.

Robin D :

I wish I could advise differently and would if there were a legal way for you to lessen this tax blow after the treatment by the employer.

Robin D :

I am sure this is not what you were hoping to find but I thank you in advance for a positive rating taking into consideration the tax laws.

Robin D. and other Tax Specialists are ready to help you