Can a divorce attorney issue a client a 1099 for fees not compensated?
I paid my first divorce attorney $20k in fees and hold about $4300 outstanding. I was RIFd from my situation in September, have a toddler at home and an investigational ex-husband who hasn't been paying his child support.
The attorney sent me a letter threatening to write rotten the amount I owe her of $4300 and issue me a 1099 as if it is imcome to me, but it isn't. Is she legally allowed to do this?
Answers:
If somebody writes past its sell-by date a debt to you, then yes, they *can* issue you a 1099 as if it's income. Think about it. You owed them $4300, in a minute you don't owe them anything. That changes your financial status exactly as much as it would change if someone give you $4300 in income. That's the rationale behind it.
Basically, they're writing *you* rotten on their taxes as a bad debt and taking a loss on your account. That's why they would do this.
Having a $4300 debt removed from your describe is the same thing as have someone write you a check for $4300. That's why you can be given a 1099 for debts that are written off.
Yes, he can do that, and he probably will because in writ for the attorney to write off the debt on his business taxes, he has to issue you a 1099 to show where on earth the money went. You see, if you had salaried the debt, the attorney would have made $4300 more, which means the IRS would own been able to export tax that money. Since they can't tax the $4300 from the attorney's business they will tax it from your personal income.
See IRS Pub 525 page 19 under the heading Canceled Debt.
http://www.irs.gov/pub/irs-pdf/p525.pdf
TaxRef
http://www.pdftax.com/
The attorney is blowing smoke. While they aspiration they could send you a 1099-C, they aren't a bank or a some other financial institution. The IRS won't tolerate him issue you the form.
If he tries to issue you a 1099-Misc, he can't, you didn't do work for him. You would protest this by writing the IRS.
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The attorney sent me a letter threatening to write rotten the amount I owe her of $4300 and issue me a 1099 as if it is imcome to me, but it isn't. Is she legally allowed to do this?
Answers:
If somebody writes past its sell-by date a debt to you, then yes, they *can* issue you a 1099 as if it's income. Think about it. You owed them $4300, in a minute you don't owe them anything. That changes your financial status exactly as much as it would change if someone give you $4300 in income. That's the rationale behind it.
Basically, they're writing *you* rotten on their taxes as a bad debt and taking a loss on your account. That's why they would do this.
Having a $4300 debt removed from your describe is the same thing as have someone write you a check for $4300. That's why you can be given a 1099 for debts that are written off.
Yes, he can do that, and he probably will because in writ for the attorney to write off the debt on his business taxes, he has to issue you a 1099 to show where on earth the money went. You see, if you had salaried the debt, the attorney would have made $4300 more, which means the IRS would own been able to export tax that money. Since they can't tax the $4300 from the attorney's business they will tax it from your personal income.
See IRS Pub 525 page 19 under the heading Canceled Debt.
http://www.irs.gov/pub/irs-pdf/p525.pdf
TaxRef
http://www.pdftax.com/
The attorney is blowing smoke. While they aspiration they could send you a 1099-C, they aren't a bank or a some other financial institution. The IRS won't tolerate him issue you the form.
If he tries to issue you a 1099-Misc, he can't, you didn't do work for him. You would protest this by writing the IRS.
Related Questions: