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Old 02-06-2017, 01:44 PM
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Cash Settlement in 2013...Recieved w2 in 2016?

In 2013 I sold a severance pay claim to a liquidator and they gave me $36K cash. I claimed this income on my 2013 income taxes and paid the appropriate tax. In 2016 the settlement was closed and the amount of the final claim was $10K. I then recieved a W2 for the $10K in 2016 but since I sold my claim in 2013 I am actually not getting $10K in 2016? How do I report this W2 on my 2016 taxes as I in theory already paid the taxes in 2013 and am not receiving $10K in 2016? How do i get a refund on the taxes paid against the 10K in 2016 that I paid in 2013?

Please advise
Paul



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Old 02-06-2017, 10:06 PM
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In 2013 I sold a severance pay claim to a liquidator and they gave me $36K cash. I claimed this income on my 2013 income taxes and paid the appropriate tax. In 2016 the settlement was closed and the amount of the final claim was $10K. I then recieved a W2 for the $10K in 2016 but since I sold my claim in 2013 I am actually not getting $10K in 2016?=====>Correct; Tax returns must report income for the year in which it was earned. You cannot report income earned in one tax year on the income tax return for the next. So as you received the whole of $36K cash in 2013 and paid income taxes , then as you said you owe no tax liability to IRS/your home state since you paid appropriate taxes on the whole $36K on your 2013 return. The IRS typically discovers if you omitted information from a specific W-2 when you sent your tax return;

How do I report this W2 on my 2016 taxes as I in theory already paid the taxes in 2013 and am not receiving $10K in 2016? ======>you STILL need to report and pay tax on $10K on your 2016m return; however, Only a w-2 or other 2016 income can go on your 2016 return. What you need to do is amend your 2013 return for refund on additional income of $10K on which you paid tax on your 2016 federal/state returns. You must file 2013 amended return by apr 15 2017; The IRS has three years to give you a refund For example, your 2013 tax return is due on April 15th, 2014. Add three years to this filing deadline, and you have until April 15th, 2017 to file your 2013 tax return and still get a tax refund.Amended returns have to be printed and mailed.

How do i get a refund on the taxes paid against the 10K in 2016 that I paid in 2013?=====>>as mnetiooned above; you MUST file form 1040X for 2013 return before apr 15 2017 for refund



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