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Does anyone know if you can take some kind of deduction on your personal taxes for money owed to you by a company? My DH was part owner of a company and left because of some questionable dealings by his business partners. They still owe him money, is this something we should be deducting on our taxes? The still haven't released his retirement funds either, which is another post. We have had attorneys call and we are still fighting them but still no money.
"A bad debt is deductible for tax purposes if it is related to your trade or business. Bad debts may include accounts receivable from customers or clients that you cannot collect, and also loans or guarantees of loans that you make in the course of your trade or business. Different tax rules apply for partially and totally worthless debts."
Does anyone know if you can take some kind of deduction on your personal taxes for money owed to you by a company? My DH was part owner of a company and left because of some questionable dealings by his business partners. They still owe him money, is this something we should be deducting on our taxes? The still haven't released his retirement funds either, which is another post. We have had attorneys call and we are still fighting them but still no money.
Nope - unfortunately, it is not a bad debt since you are still going after them to recover it. Obviously it would also not be listed as income since IRS only recognized income as that which is received, not just earned. Sorry
I didn't think there was anything but I am not a tax expert either so I thought I would check. I am going to be very curious to see if they report this as paid income on his W-2--THEN we can really go after them .
If you have reported the income, there would be some form of deduction for the loss of the reported income. There is no "bad debt" unless the income was reported as either earned income or business income. In other words, it ensures that you will not be taxed on income reported but not really received.
Unusual situation for a wage earner. Possible but unusual.
The retirement funds issue is different and complex. I would suspect since none of this income was taxed at any time, the issue is not of deduction but of theft. This issue would require further research and a whole lot more information.
Depending on the size of the money being discussed, potential for current and future liability, amount of retirement funds at stack, I would suggest a good attorney would be appropriate. I would not wait until the crisis becomes even bigger.
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We have had attorneys call and we are still fighting them but still no money.
