Credit Card Center Advertiser Disclosure†
01-13-2017 06:47 PM - edited 01-13-2017 06:59 PM
Hi so I have several issues/questions actually regarding this so first ill state the facts
-I'm currently 23 and live rent free with my mom.
-I work under my mom which she owns a small business.
-I dont believe im filed as a dependent under her
-I live in Los Angeles, California
FIrst question -
I receive weekly paychecks from her and I deposit them every week via ATM but one day i received $20,000 by accident and I just deposited it like normal. Once we found out, it was too late to return it so I just wire trransfered the money back to her account less -$3,000 i believe for company expenses I bought. Since the deposit went through does that mean I get taxed/file taxes as if I got $20,000 more?? If so how should i fix this.. It was probably around April or so and the checking account I deposited too has been closed since. I closed the account with Wells Fargo July and have a new one with BOFA.
Second question -
I use my credit card for many company expenses so my mom reimburses me with either cash or checks but its up to $10,000-$30,000 over the year which in return means i deposit a lot of money over the year.. Does that flag any alert to the IRS when it just company expenses reimbursed for?
Any suggestions/help is very kindly appreciated
01-13-2017 08:53 PM - edited 01-13-2017 08:54 PM
I have not received it yet so im not sure.. what happens if its included or not?
If it's not (it shouldn't be) you don't worry about it. If it is, talk to mom.
Reimbursements shouldn't be there either; transaction record of any account doesn't go to the IRS (at least under any normal circumstance, criminal investigations not withstanding), only interest statement off said account, which is probably near zero.
01-14-2017 04:11 PM
Thanks for your reply.. but what about regarding 10k+ deposits?
That's for anti-money laundering, not income tax related per se.
Also it's more sophisticated than that but I digress heh.
05-18-2017 03:46 PM - last edited on 05-21-2017 09:23 PM by Revelate
Under 10k is not reported to IRS over 10k it is.
Have an accountant be able to describe everything in detail when they file your taxes, that way you avoid any hiccups down the road.
05-18-2017 06:56 PM
You are only going to pay taxes on the income you receive from the business, not any expense reimbursements. This income should be reported to you on a W-2 assuming your mom is operating her business correctly. It's possible you could be classified as an independent contractor under a narrow set of rules, in which case you should be getting a 1099. If payroll taxes are being deducted then you are being treated as an employee and should be getting a W-2, otherwise you are being treated as an independent contractor and should be getting a 1099.
In any event, you need be be keeping a really good paper trail of all that non payroll money coming into your account. I would highly recommend full expense reports with receipts for everything you are getting reimbursed for. In the event of an IRS audit all those non payroll deposits are going to look like untaxed compensation (especially from a family business). While your chances of an audit are probably slim, if you don't have a really good paper trail you could have a lot of explaining to do.
05-18-2017 07:14 PM
If you deposit enough cash into your account the IRS gets reports about it. If regularly depost only about half the amunt required to file the form the bank still keeps records and still files the form. This called structured trnsactions and we do not want to talk this topic. speaking now as some one who retired their membership in the state society of cpa's 10 years ago. With regard to expenses you need to file an expense report to the biz monthly or as needed with the reciept reason so forth and biz writes you a check. Paychecks are best for family members when they are paid the same every week/ 2 weeks then quarterly bonuses and year end bonus. Inregard to the overpaid it is not included in pay. You just need to be able to show you got it and paid it back promptly. no bid deal.
05-21-2017 08:25 AM
what groundhog said. You have to see what is in your W2, it doesn't sound like you are a 1099 contractor.
If it is in your W2, you would need to get a corrected W2 from employer/mom
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.