What do you mean she has no earned income? What does she get paid to do? If she has a job that someone pays her to do, SHE HAS EARNED INCOME. Sorry to yell, but I find it amazing that this thread is almost four full pages long and you don’t seem any closer to understanding anything since your first post.
What kind of work is this - some type of personal services? How does she know where to go and work if there are no names or phone numbers involved?
I don’t understand this whole situation. I think you posted before that you’re from PA. If your Mom had gross receipts of cash income of $12,000 (since she doesn’t seem to deduct any expenses), she should have received 1099 forms, if one employer doesn’t provide it, but 5-6?. But she should only have to pay her self employment taxes at the most for federal and for state, I think she should qualify for tax forgiveness so not sure why she would owe $400?
Also you were saying before that your Mom could pay 10 k towards college for you. How is she going to do that if she makes $12,000 and also supports your Dad? And if your Dad is not working where he lives then why isn’t he with you and your Mom?
I have a guess…Dad is in another country. Mom is a permanent resident. I suspect mom is an immigrant who works under the table for cash at a number of different business or in homes. Common occupations/businesses are housekeeping, child care, restaurant work, construction. Reporting names or numbers or receiving a 1099 will likely result in her termination as the employer doesn’t want to pay SS or other taxes. Demanding things be above board may also get her black balled from whatever industry currently pays her salary. She probably makes considerably more than 12K a year, but nearly enough to be considered even middle class. So, Mom reports amounts under what would generate a 1099 or require certain employers to have to pay SS. There’s a large immigrant community where I live and this is very common.
There is nothing the child can do about the legal/ethical implications of all this. I suspect the “accountant” may be a community leader who “helps” with taxes but has no real training or understanding of the system. I mean, what real accountant tells someone with earned income not to apply for the EITC? He or she probably doesn’t understand it, and doesn’t want anything hinky on a return that might trigger an inquiry and eventually jeopardize his or her tax business.
Or I may be way out in left field.
I freelance. I get checks from 12 or more different companies every year. Some give me 1099s (those who pay me over $600 that year), some don’t. I report the 1099 income on my Schedule C and enter the rest as a single amount. Whether I get 1099s or not, the amount i report is the same.
I agree the tax situation sounds funky but what can the student do?
The only issue would be if the student receives need based financial aid with reported income numbers that are knowingly less than what is actually earned.
It is considered fraud to get financial aid using knowingly inaccurate numbers for financial aid gain.
I would agree that this is likely “under the table” income. But here in the U.S. one is supposed to declare all income one receives, whether given in cash or given in checks or whatever.
However, as noted above…what does the student do?
If the income reported is very low (and $12,000 a year is very low), the family should be prepared for the likelihood of verification. The schools will rightfully want to know how the family makes ends meet on this income. The family could be asked to provide documentation of all income received. In addition, the school can ask how the family is paying for rent, food and other essential expenses. If they are receiving assistance from someone else, they will need documentation of that as well…to support that they actually are only earning $12,000 a year and living off that amount. For example, if they have no rent because they are living with a relative, they could be asked to document that.
I don’t understand why the “accountant” is asking for contact information for the employers who didn’t issue 1099s. That information isn’t required on Schedule C. Just the total amount earned.
Half of Happykid’s income is self-employment, and only about half of those organizations pay her for enough gigs in a year to be required to file a 1099, and of those that should, a whole bunch can’t be bothered to for one reason or another. Like OHMomof2, Happykid keeps her own records of her cash-with-no-paper-trail income, and reports it all along with the income supported by 1099s. She has a ferociously detailed record-keeping system in place for all of this stuff.
Now, if the OP’s mom is disorganized, the “accountant” may be asking for that information in order to help her set up a better record-keeping system.
All of the income my mom is receiving is cash, and she tries her best to keep track of it all. I think 12,000 is pretty accurate (I could argue she earns even less that that…), and we do pay for rent…but yeah, I don’t know how to verify.
She can’t refile and send in new tax returns right?
So you and your mom, and your father in a separate household overseas, all live on $12,000 or less per year? There is no additional source of family income?
We have about $15,000 saved up.
She can amend her tax return if she made a mistake or missed something (like the EITC).
I’m just worried about how she’s going to verify my family income…she can show her previous year tax returns where she did get W-2/1099 and had about the same amount of income.
And also it’s not her fault that she has to work at one place for a month and then switch the next month. It’s her employers’ fault…
OK, but that doesn’t answer the questions I asked. Is there any additional source of family income? Are you using some of that savings to supplement your mother’s $12,000 annual income?
Yeah, basically.
Yeah, that’s not going to work. If she’s required to file taxes, and for qualifying for financial aid, the IRS and colleges will need to know how much she made in 2014. Not a guess, and not something that’s “about the same amount” as previous years.
Okay well I don’t know what to do…she told me she could’ve gotten 1099/W2s at the places she worked, but she wasn’t able to.
I don’t know what to do.
She can get a written statement from her employer(s), maybe that would work when it’s needed.
So, yeah, basically there is an additional source of family income, or yeah, basically you are using some of that savings to supplement your mother’s $12,000 annual income? Or both?
Look, there are plenty of knowledgeable people her on CC that are willing to lend a hand by providing information and giving advice. But you need to do two things here to assist with that process:
-Obtain and pass along as much information about your situation as you can, that is necessary.
-Be clear and concise with the information that provide. Don’t make people guess.
Here’s what I’m talking about. This statement is a contradiction. She “could have” but she “wasn’t able to”? Makes no sense. If she could have, than she was able to, and she should have.
No. There’s no additional source of income, we just have $15,000 saved.
By the way, I don’t know what I’ll do (and my mom is freaking out because we are really really poor but if colleges ask us to verify, she won’t know what to do besides providing rent information)
And yeah, she should have, but she didn’t…
She files with the records she has, even if it is just a list of payments made when she received them. She needs to record cash payments in a book as she receives them, or if she has a bank account she can review deposits made.
What people are saying is that $12000 per year, or $1000 per month, is not a lot of money to live on plus send money to your father. How do you live? What is your rent? Do you get services like food stamps or TANF? If not, you probably qualify for these, and for the earned income credit, but you/she has to keep some records if the employers (and are they employers or just people she contracts with to do her job?) don’t provide W-2 or 1099. We’re trying to see if you qualify for MORE money and won’t have to pay out of pocket for taxes. If your mother files as Head of Household, earns $12,000 in earned income, has one qualifying child (you), she’d get $3305 in earned income credit. THAT can be used to pay any taxes for self employment and she’ll probably get some back. Some states also have earned income credits.
If she truly does only make $12000, it is very likely your FAFSA will be selected for verification. You will need to answer these questions (how much money? where does it come from) to the schools before they’ll give you the Pell grant or other money. You’ve done nothing wrong, you just have to answer.