Level 7

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1040-X need to file for unreported cash income

Forum|Forum|2 years ago
June 24, 2024
3 replies
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Hi everyone.

A new client came to me to file Form 1040-X regarding unreported cash income for 2020, 2021, and 2022.

The cash income amounts to around $7,000 for each of those three years, and he is a driver.

I would like to know what the tax audit consequences would be if I file Form 1040-X for him.

Any help!

ProSeries Professional

This topic has been closed for replies.

Best answer by George4Tacks

I think you need to make an ethical decision - Is this client giving you true and correct figures for his income and expense OR is he just gaming the system by getting those SE quarters to qualify for Social Security. You are signing the return and need to be comfortable doing so.

T

TaxGuyBill

Level 15

Are you asking about the "risk" of an audit, meaning how likely will there be an audit?

It seems unusual that the taxpayer suddenly want to add unreported income to his tax return. Did you ask WHY it was not originally reported and now WHY he wants to report it?

Will adding this income cause him to owe more tax? Or will adding this income INCREASE his refund, such as EIC, the Additional Child Tax Credit and/or the Covid sick credit?

HOPE2Author

Level 7

Thanks @TaxGuyBill

Yes, I am asking the risk of an audit. I asked him WHY you did not report it timely, said : I forgot it and he is thinking regarding social security benefit since he is 62.

If cash income adding to tax return, he should pay more tax and no refund will be increased by EIC or other credits.

IRonMaN

Level 15

"I forgot it and he is thinking regarding social security benefit since he is 62"

Sounds to me like you don't have a very honest client. It sounds like his memory is getting wishy washy either because of age or his memory is trying to balance out taxes with long term benefits. Personally, I would tell this client to have a nice life. Life is too short for tax preparers when they are stuck dealing with clients that like to play games with their taxes.

Slava Ukraini!

P

poolcleaner

Level 8

Did he file an extension for 2020?

HOPE2Author

Level 7

Thanks, no; he filed the original tax return.

George4TacksAnswer

Level 15

I think you need to make an ethical decision - Is this client giving you true and correct figures for his income and expense OR is he just gaming the system by getting those SE quarters to qualify for Social Security. You are signing the return and need to be comfortable doing so.

Answers are easy. Questions are hard!

IRonMaN

Level 15

"How is it Social Security fraud if he has decided to be honest about his income?"

But what is the "honest" amount of his income?

Slava Ukraini!

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